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Infosys shares plunge 6% despite beating Q3 estimates, analysts raise concerns

Reuters |
Jan 17, 2025 11:40 AM IST

Infosys shares dropped nearly 6% despite beating Q3 estimates, raising concerns about earnings quality

Shares of India's No.2 IT company Infosys fell nearly 6% on Friday despite beating third-quarter result estimates, as analysts raised concerns about the quality of earnings.

Despite exceeding third-quarter result projections, shares of India's No. 2 IT company, Infosys, dropped about 6% on Friday as analysts expressed scepticism about the calibre of results.(AFP/Idrees MOHAMMED)
Despite exceeding third-quarter result projections, shares of India's No. 2 IT company, Infosys, dropped about 6% on Friday as analysts expressed scepticism about the calibre of results.(AFP/Idrees MOHAMMED)

Infosys dragged the IT sector down by 2.6% on the day, with eight of the 10 constituents trading in the red. The stock was on track for its worst day in nearly one-and-a-half years.

The company's revenue growth was driven by a higher component of "third-party items" in its deal pipeline, "which drove concerns around the quality of the beat and raise", Morgan Stanley analysts said in a note.

Also read: Infosys CEO asked about low salary hikes, toxic work culture. His response

"Given that the commentary on small deals pipeline is not showing any meaningful signs of inflection, we now assume the (industry-wide) recovery to be more gradual than before," the analysts said.

Infosys fell 5.8% in Mumbai on Friday, following a near 6% drop overnight in its U.S.-listed shares.

(Reporting by Indranil Sarkar, Manvi Pant and Anuran Sadhu in Bengaluru; Editing by Mrigank Dhaniwala)

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