Infosys, one of India’s leading IT services companies, reported strong third-quarter (Q3) results for the fiscal year 2024-2025, yet its stock witnessed a significant drop on January 17, 2025. Despite an 11.46% year-on-year increase in net profit and healthy revenue growth, the company's shares fell by approximately 5.83% to ₹1,816 on the National Stock Exchange (NSE) in the early hours of trading on Friday.
This decline came in the wake of an overnight drop in Infosys' American Depositary Receipts (ADR) on the New York Stock Exchange (NYSE).
Infosys Q3 FY25 performance: A closer look
In the quarter ending December 31, 2024, Infosys posted a net profit of ₹6,806 crore, marking an 11.46% growth from ₹6,106 crore in the same period last year. The revenue generated by the company during the quarter was ₹41,764 crore, marking a 7.58% increase compared to ₹38,821 crore in Q3 FY24.
Infosys CEO and MD, Salil Parekh, mentioned that the company achieved strong revenue growth despite the seasonally weak quarter. Furthermore, the company’s digital offerings, market positioning, and key strategic initiatives have seen success, and they continue to strengthen their enterprise AI capabilities, with a particular focus on generative AI.
The company also raised its full-year revenue growth guidance, now expecting a 4.5% to 5% growth in FY25, up from its previous estimate of 3.75% to 4.5%. However, despite this optimistic outlook, Infosys’s stock price saw a significant drop on the day following the announcement.
Decline in Infosys shares: Market reactions
Infosys shares initially dipped by as much as 5.83% on January 17, 2025, trading at ₹1,816 on the NSE. The drop in the company’s performance, despite achieving positive results, can be linked to several factors, notably the performance of ADR on the NYSE. Infosys ADRs fell by 5.77% on January 16, which likely impacted investor sentiment and led to the negative movement in Indian markets.
One possible reason behind the drop is the sell-off in IT stocks on Wall Street, which saw the Nasdaq Composite index fall by 0.89%, influenced by a significant drop in Apple's stock.
Insights from market analysts
Several analysts have expressed mixed views on the stock’s performance post-Q3. While Infosys exceeded revenue expectations, there are concerns over its fourth-quarter outlook. Some analysts pointed to the company's revised revenue growth guidance, which suggests a possible sequential decline of 2.5% to 0.6% in Q4.
The broader market impact
The drop in Infosys shares comes at a time when many IT stocks are facing pressure, especially in the wake of weak performance from key tech players like Apple. The broader market's decline has been exacerbated by concerns over global economic conditions, and many investors have become more cautious in their stock selection.
Despite this, Infosys's strong financials, focus on digital transformation, and continued expansion into new markets position it well for long-term success. As such, for investors looking to buy shares online, Infosys may still be an attractive option, especially if the stock price remains lower in the short term.
Key insights
At 12:17 PM, on January 17, 2025, the shares of Infosys Limited traded 5.41% lower at ₹1,822.10 per share as compared to the previous close of ₹1,951.80 per share on the National Stock Exchange (NSE). The stock price drop follows the company's positive Q3 results and the decline of Infosys ADRs on the NYSE, reflecting broader market sentiment.
For those looking to buy shares online, Infosys presents an interesting opportunity, as the company’s financials remain strong, and its focus on digital transformation and AI capabilities continue to drive growth.
As the market fluctuates, it is essential to keep an eye on Infosys’s performance and future developments, as the company remains a key player in the global IT services industry. If you plan to buy shares online, understanding the broader market dynamics and evaluating the company's long-term prospects will be crucial to making an informed investment decision.
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