Infosys Shares Plunge Amid Weak Q4, Wage Hike Uncertainty

Infosys shares fell by 5% on January 17, 2025, due to concerns over a weak Q4 and wage hikes. Despite surpassing Q3 earnings estimates, analysts expect a weaker Q4, with unchanged revenue guidance. Infosys’ American Depository Receipts (ADRs) also dropped by 6%.

Infosys’ Q3 net profit rose by 4.6% to Rs 6,806 crore, and revenue increased by 2% to Rs 41,764 crore. The management anticipates a softer Q4 due to slight furloughs, fewer working days, and third-party revenue reversal. Uncertainty about the margin impact of wage hikes, starting January 1 and April 1, adds to investor concerns.

The wage hike’s margin impact will be felt in Q4 FY25 and Q1 FY26, but the company has not clarified the extent. Strong deal wins in Q3 led Infosys to revise FY25 revenue growth guidance to 4.5-5%. The EBIT margin improved by 20 basis points to 21.3%, with FY25 guidance at 20-22%.

While Q3 earnings and commentary were positive, the market reacted negatively to potential Q4 challenges and wage hike uncertainty.