Infosys share price, one of India’s leading IT services companies, are facing a potential selloff following soft March quarter results and a downward revision in analyst price targets, which has impacted investor sentiment. The impact of these developments was evident in the sharp fall of its American Depository Receipt (ADR) by 9.78% on Thursday in NYSE trade, followed by another 1.43% drop on Friday.
Since the Indian equity markets were closed on Friday celebrating the occasion of Dr. Babasaheb Ambedkar Jayanti the effect of disappointing Infosys Q4 results survived for one day but when the markets opened on Monday Infosys saw one of the biggest falls in its entire trading history and falls around 15% in the intraday trading. Even after such heavy fall Infosys share managed to close at around Rs. 1,259/- which is around 9% low from previous closing.
The disappointing performance in the Q4 results has led to analysts revising their profit estimates for FY24 and FY25. Phillip Capital has reportedly cut its profit estimates for FY24 and FY25 by 5-6% due to a significant miss in Q4. The new forecasts indicate a dollar revenue growth of 6% for FY24 and 11% for FY25, with an EBIT (earnings before interest and taxes) margin of 21.5% for both FY24 and FY25.
This downward revision in profit estimates and the subsequent decrease in analyst price targets have resulted in a negative impact on investor sentiment, leading to a potential selloff of Infosys shares. The sharp fall in its ADR on the NYSE trade reflects the market’s reaction to the soft Q4 results and the revised forecasts.
Infosys Limited, a global IT services company based in India, has had its fair share of ups and downs in the stock market, coupled with controversies that have impacted its reputation and shareholder value. Let’s take a closer look at some of the significant falls in Infosys share price and the controversies that have been associated with the company.
Past Infosys Share Price Falls:
2000 Dot-com Bubble:
Infosys, like many other tech companies, experienced a significant fall in its share price during the dot-com bubble in 2000. The stock, which had reached dizzying heights during the tech boom, crashed as the bubble burst, resulting in a sharp decline in its share price.
2008 Global Financial Crisis:
During the global financial crisis in 2008, Infosys share price also witnessed a significant drop. The economic downturn impacted the IT industry, with reduced spending on technology services by businesses, leading to a decline in demand for Infosys’ services and a subsequent fall in its share price.
2017 Corporate Governance Controversy:
Infosys faced a corporate governance controversy in 2017 when its founder, Narayana Murthy, raised concerns about alleged lapses in corporate governance practices and questioned the high severance pay given to the former CFO. The public spat between the board and the founder resulted in uncertainty among investors, leading to a decline in the company’s share price.
Controversies Related to Infosys Company:
Whistleblower Allegations in 2019:
In 2019, Infosys faced whistleblower allegations of unethical practices by its top executives, including irregularities in revenue recognition and aggressive accounting practices. These allegations led to an internal investigation, which impacted investor confidence and resulted in a decline in Infosys share price.
Visa Fraud Allegations in 2013:
Infosys was accused of visa fraud in the United States in 2013, wherein it allegedly used B1 visas meant for short-term business visits for long-term employment purposes. This led to a settlement with the U.S. government and a dent in the company’s reputation, impacting its share price.
Leadership Changes and Exits:
Infosys has also witnessed leadership changes and exits of key executives, which have caused uncertainty among investors and impacted its share price. For example, in 2014, Infosys saw a leadership change with the exit of its CEO, resulting in a decline in its share price.
Conclusion:
Infosys has had its share of controversies and significant falls in its share price over the years. Corporate governance concerns, whistleblower allegations, visa fraud allegations, and leadership changes have impacted investor confidence and affected the company’s reputation and shareholder value. However, Infosys has also taken steps to address these issues, strengthen its corporate governance practices, and rebuild investor trust. As an established player in the IT industry, Infosys continues to navigate the challenges and opportunities in the dynamic global technology landscape, and its share price performance remains subject to various factors, including market conditions, company performance, and external events. Investors should carefully consider these factors before making investment decisions related to Infosys or any other stock.