Infosys Q4FY15 results impact: Stock falls 4%

By comparison, the CNX IT index slipped 1.7% and the benchmark CNX Nifty lost around 1% in trade at 2:45pm

Infosys slipped around 4%, or Rs 81, to Rs 2,041 levels after reporting a net profit of Rs 3,097 crore for the fourth quarter ended March 2015 (Q4FY15). The profit was 3.5% higher as compared to the previous corresponding quarter, but missed Street estimates.

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In comparison, the CNX IT index slipped 1.7% and the benchmark CNX Nifty lost around 1% in trade at 2:45pm.

Bengaluru–based Infosys expects FY16 revenue to grow in the range of 10 – 12% in constant currency terms, which is higher than Street estimates but lower than the NASSCOM estimates of 12-14%. The company also announced a bonus issue in the ratio of 1:1.

“The Board in its meeting held on April 24, 2015 has considered, approved and recommended a bonus issue of one equity share for every equity share held, and a bonus issue, viz., a stock dividend of one American Depositary Share (ADS) for every ADS held, respectively, as on a record date to be determined. The record date for the bonus issues of equity shares and ADSs will be June 17, 2015, subject to shareholder approval,” the company said in a statement.

RESULT EXPECTATIONS

For Q4FY15, analysts at Nomura in a result preview report for instance, expected Infosys to report USD revenue growth of 0.2% quarter-on-quarter (q-o-q); (constant currency growth of 2.4% q-o-q) and 100 bps q-o-q EBIT (earnings before interest and taxes) margin decline to 25.7% due to cross currency and non-recurrence of provision write-backs. They expected the company to guide for 7-10% USD revenue growth in FY16F.

Besides, the Street also expected the management to announce a clear-cut policy regarding its plans to deal with the $5.5 billion cash on its books and an additional dividend.

"We currently expect an increase in the regular dividend pay-out ratio to 50% in FY15E from 40% in FY14A, and an additional special dividend amounting to 1% of stock price. This results in a total dividend of Rs 60/share in the March 2015 quarter," said a results preview report from Ambit Capital.