Why Infosys Shares Fell Even After Good Q2 Result : 12 Oct 2015



Infosys announced good results that beat market expectations. The stock, however, fell on the quarterly results numbers, declining as much by 5 per cent at one time before recovering a bit. The reason for the market reaction is fairly simple. The turnaround story is still a work in progress. Negatives like the CFO quitting, the company still battling 14.1 per cent attrition, and failure of the company to revise its growth projections in spite of the first half of the year being good, the market believes are signals that the turnaround story still requires substantial work. The onetime bellwether for the sector has seen some good set of numbers over the past couple of quarters, under the new leadership led by CEO and MD Vishal Sikka, the first non-promoter in the company's history to hold that office. Improved operational efficiencies including higher utilisation has meant that operating margins have gone up by a substantial 150 basis points in this quarter (that is about 1.5 per cent). The company also announced new total contract value wins of close to a billion dollars in this quarter. However, the third quarter usually is 'soft' for most services companies given the lower number of working days in this quarter. The markets seem to be factoring in that Infosys stock has also run up quite a bit - about 44 per cent - since Sikka took charge in August 2014. Compared to Infosys's shares run-up, TCS has gone up just 4.5 per cent and Wipro by 10.5 per cent in the same period. Now, Infosys's results and numbers need to catch up with the rise on the bourses.
Why Infosys Shares Fell Even After Good Q2 Result : 12 Oct 2015 Why Infosys Shares Fell Even After Good Q2 Result : 12 Oct 2015 Reviewed by Money99 on 23:49:00 Rating: 5

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