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Infosys Shares Drop 3.5% As company Warns Of Margin Contraction

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Shares in Infosys fell as much as 3.5 per cent in trade after the company warned of margin contraction.

 

The stock was last trading at Rs 1193, down 3.5 per cent on the NSE. Moneycontrol.com, drawing from excerpts from an interview with Infosys' UB Pravin Rao on CNBCT TV 18 said that Rao expects margins will likely stay pressured in the near term given the "commoditisation" that has taken place in the industry, and said they would pick up once investments into machine learning and automation fructify.

Infosys Shares Drop 3.5% As company Warns Of Margin Contraction
Infosys has seen a dramatic rally in its share price over the last few months, as quarterly results have been upbeat at the company. In fact, the company has beaten some of its peers in terms of margins and dollar revenue guidance.

The warnings on margin contraction may not cheer investors too much. The commoditisation" of the business, along with salary hikes, may see a few more quarters of pressure for the company.

Dollar revenue guidance for the last two quarters has beaten most forecast and the company is now gearing to surpass industry growth rates of Nasscom.

 

The shares of Infosys has seen a dramatic rally in the last few months, and the present guidance by the management will lead to a pause in that rally.

GoodReturns.in

Read more about: infosys
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