Infosys shares in biggest plunge since March 2020 after weak growth guidance

The company's shares fell as much as 15% on Monday after it said sales will grow only 4% to 7%

Analysts were expecting Infosys sales to grow by 10.6 per cent during the current financial year. Reuters

Infosys nosedived 15 per cent on Monday, the biggest intraday drop since March 2020, after the company’s guidance painted a negative outlook for India’s technology sector following turmoil at US and European banks.

The IT services company was hit by a wave of downgrades after it said on Thursday that sales growth will be just 4 per cent to 7 per cent this financial year because of a reduction in client spending and an uncertain demand environment due to US bank failures.

That compares with an average analyst estimate of 10.6 per cent.

At least 10 brokers including JPMorgan Chase, Macquarie Group and Citigroup have lowered their ratings on the stock. Analysts are now the least bullish on Infosys since December 2019, according to data compiled by Bloomberg.

The outlook for India’s IT services sector is set to worsen even further over the next six months before bottoming out, according to Reliance Securities.

“Uncertainty in the US and EU region, coupled with pricing pressure would lead to a challenging FY24,” analyst Mitul Shah wrote in a note.

Infosys’ US-listed shares dropped 11 per cent in New York trading during Thursday and Friday after the results were announced. Indian markets were shut Friday for a holiday.