Infosys Shares Plunge 5% to Eight-Month Low Amid Tariff Uncertainty and Broker Downgrades
Infosys : On March 12, 2025, Infosys, one of India’s leading information technology (IT) companies, experienced a significant decline in its stock value. The shares plummeted nearly 5%, reaching levels not seen since July 2024, marking an eight-month low. This downturn was primarily driven by downgrades from major brokerage firms, citing concerns over discretionary spending by U.S. clients amid escalating tariff uncertainties.
Brokerage Downgrades Fuel Decline
Motilal Oswal Financial Services downgraded Infosys from ‘Buy’ to ‘Neutral’. The firm highlighted global geopolitical uncertainties and the looming threat of a potential trade war, triggered by U.S. President Donald Trump’s tariff policies, as factors destabilizing the IT sector. They noted that “sentiment has turned cautious, with enterprises taking a ‘wait-and-watch’ stance.”
Similarly, Morgan Stanley downgraded Infosys to ‘Equal Weight’ from ‘Overweight’ and reduced the target price to ₹1,740 per share, down from ₹2,150. Despite this reduction, the new target still suggests a potential upside of over 9% from the current market price. Morgan Stanley also expressed a preference for Tata Consultancy Services (TCS) over Infosys in the current market scenario.
Impact on the IT Sector
The decline in Infosys’s share price significantly impacted the Nifty IT index, which dropped over 3% on March 12. Other IT stocks mirrored this downward trend:
- Wipro: Fell over 5% to ₹263 per share.
- HCL Technologies: Declined by more than 3%.
- LTI Mindtree: Experienced a drop exceeding 3%.
- Persistent Systems: Shares decreased by over 3%.
These declines underscore the broader market’s apprehension regarding the IT sector’s stability amid global economic uncertainties.
Infosys Financial Snapshot
To provide a clearer picture of Infosys’s current financial standing, here are some key metrics:
| Metric | Value |
|---|---|
| Market Capitalization | ₹6,51,998 Cr. |
| Current Price | ₹1,569 |
| 52-Week High / Low | ₹2,007 / ₹1,358 |
| Stock P/E Ratio | 23.6 |
| Book Value | ₹213 |
| Dividend Yield | 2.42% |
| Return on Capital Employed (ROCE) | 40.0% |
| Return on Equity (ROE) | 31.8% |
| Face Value | ₹5.00 |
| Promoter Holding | 14.4% |
| Price to Book Value | 7.37 |
| Debt to Equity Ratio | 0.09 |
| Pledged Percentage | 0.00% |
| Industry P/E | 27.6 |
| Graham Number | ₹564 |
| Intrinsic Value | ₹1,023 |
| Relative Strength Index (RSI) | 23.6 |
| Earnings Per Share (EPS) | ₹66.6 |
| Number of Equity Shares | 415 |
| PEG Ratio | 2.10 |
| 200-Day Moving Average (DMA) | ₹1,793 |
| Free Cash Flow (3 Years) | ₹64,621 Cr. |
| Free Cash Flow (5 Years) | ₹99,434 Cr. |
| Debt | ₹8,221 Cr. |
| Return on Assets | 20.0% |
| Price to Sales Ratio | 4.08 |
Broader Market Implications
The ripple effect of Infosys’s decline was evident across the broader Indian stock market. The Nifty 50 index decreased by 0.27% to 22,438.25, while the Sensex fell by 0.22% to 73,943.99. These declines were exacerbated by concerns over the U.S. economy, especially after President Trump’s abrupt announcements regarding tariffs on Canadian steel and aluminum, which he later reversed. Such unpredictable policy shifts have heightened fears of a potential U.S. recession, influencing global investor sentiment.
Analyst Perspectives
Analysts are closely monitoring the situation, emphasizing the importance of upcoming economic data. Anand James, Chief Market Strategist at Geojit Financial Services, commented, “Expect swings on either side (of the flat-line) for the Nifty 50 before directional clarity emerges.” Investors are particularly keen on the forthcoming inflation data from both the U.S. and India, as these figures could significantly influence future monetary policy decisions.
Looking Ahead
The current downturn in Infosys’s share price reflects broader concerns about the global economic environment and its potential impact on the IT sector. As companies navigate these uncertainties, stakeholders will be vigilant, assessing how geopolitical developments and domestic economic indicators influence market dynamics.
Q&A Section
Q1: Why did Infosys shares drop by 5% on March 12, 2025?
A1: Infosys shares declined due to downgrades from major brokerage firms like Motilal Oswal and Morgan Stanley. These downgrades were based on concerns over global geopolitical uncertainties and potential reductions in discretionary spending by U.S. clients amid escalating tariff issues.
Q2: How did other IT companies fare on the same day?
A2: Other IT companies also experienced declines. Wipro’s shares fell over 5% to ₹263, while HCL Technologies, LTI Mindtree, and Persistent Systems each saw their shares drop by more than 3%.
Q3: What financial metrics are currently notable for Infosys?
A3: Key financial metrics for Infosys include a market capitalization of ₹6,51,998 crore, a current share price of
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.