5 reasons why investors dumped the Infosys stock after its Q2 results?

Business

oi-Sunil

By Sunil Fernandes

Updated: Saturday, October 13, 2012, 12:01 [IST]

The street was disappointed with Infosys Q2 2013 numbers, in line with previous quarters and the stock was down a whopping 8%. Here's what spooked investors after the company declared its results.

1) Revenue guidance

The company gave a revenue guidance of around $7.343bn; YoY growth of 5% (5.7% in constant currency terms). The guidance was expected to be much higher by the street after the company's recent acquisition of enterprise solutions specialist Lodestone.

2) Company scaled down rupee EPS guidance

The company cuts its rupee EPS guidance to around Rs 160 per share, against Rs 166 projected earlier. With the rupee gaining substantantially in the last few weeks, it was likely to happen.

3) Margins were under pressure

The company's margins came under pressure in Q2 2013 and are likely to be so, given the challenging business environment that the company faces. Analysts believe that the company is now ready to sacrifice margins to improve volumes.

4) CFO Balakrishnan to resign

The current CFO Balakrishnan would resign from October 31, only added to the negative sentiments for the stock.

5) Employee wage hike

The company has announced an employee wage hike which is likely to put further pressure on margins.

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