Infosys shares drop 2% on termination of $1.5-billion deal

Shares of Infosys Ltd fell as much as 2% on Tuesday after the software services firm announced the termination of a Memorandum of Understanding (MoU) with an unnamed global company last week.

The IT stock opened at ₹1,535 apiece against its previous closing price of ₹1,562.90 on the National Stock Exchange (NSE). Shares of the company hit an intraday low of ₹1,523, taking its market cap ₹6.40 lakh crore. Infosys was among the top losers in the benchmark Nifty 50 Index.

The termination of the deal comes days after Infosys chief financial officer Nilanjan Roy suddenly handed over his resignation with effect from April 1, 2024. Roy will be replaced by Jayesh Sanghrajka, who currently serves as the executive vice president and deputy chief financial officer of the Bengaluru-headquartered company.

Apart from its CFO, two of the IT company's presidents — Mohit Joshi and Ravi Kumar — have resigned from their respective roles in the company as president. While Joshi is currently leading Tech Mahindra as the new CEO, Kumar is leading Cognizant.

Infosys has slashed its revenue growth guidance thrice during the ongoing fiscal. At the start of the year, the IT firm projected its revenue guidance to be in the range of 4-7% for FY24. On July 20, Infosys scaled down its guidance between 1% and 3.5% for the current financial year. That forecast also didn't age well as the company further cut the upped-end of its revenue growth guidance to 2.5% in October.

In May, Infosys announced the launch of Topaz — an AI-first set of services, solutions and platforms using generative artificial intelligence (AI) technologies. Earlier in December, Infosys' research arm said that Europe is doubling down on generative AI (GenAI) investment but is on a more cautious path than North America. The research forecasts that European companies will increase GenAI investments by 115% in the next year, to $2.8 billion.

The pace of investment is slower than in North America where spend is expected to reach close to $6 billion. This more cautious spending is largely due to concerns around ethics and bias driven by the more regulated European market, the research said.

France and Germany are expected to double spending on GenAI, to nearly $730 million in France and almost $610 million in Germany, in the next 12 months. In both countries, about 50% of companies have either implemented GenAI or have implemented and have created business value from it – compared with roughly 40% in the U.K., Benelux, and Nordics. The U.K. is expected to move past Benelux into third place in the next 12 months, more than doubling spend to nearly $510 million.

Nordic companies are expected to increase spending at the highest rate in the next 12 months – more than 2.5x their current spending, to more than $470 million.