Infosys shares slumped over 3 per cent on Tuesday, following Royal Bank of Scotland's decision to cancel a project to set up a separate bank in the United Kingdom. RBS announced last week that it will not pursue its plan to separate and list a new UK standalone bank, Williams & Glyn (W&G), for which Infosys was a key technology partner.
The cancellation of the deal is likely to hit Infosys revenue to the tune of $40-$50 million during the current fiscal year, analysts said. This could translate into earnings per share cut of 1-2 per cent and job losses over the next few months, they added.
"Infosys has been a W&G program technology partner for consulting, application delivery and testing services, and subsequent to this decision, will carry out an orderly ramp-down of about 3,000 persons, primarily in India, over the next few months," Infosys said in a statement.
The cancellation of the deal is likely to hit Infosys revenue to the tune of $40-$50 million during the current fiscal year, analysts said. This could translate into earnings per share cut of 1-2 per cent and job losses over the next few months, they added.
"Infosys has been a W&G program technology partner for consulting, application delivery and testing services, and subsequent to this decision, will carry out an orderly ramp-down of about 3,000 persons, primarily in India, over the next few months," Infosys said in a statement.
The loss of the five-year 300-million pound RBI deal could force Infosys to downgrade its FY17 revenue guidance for the second time this year, analysts said. Infosys had in July cut its annual sales outlook citing weak demand, which triggered a selloff in the stock. Infosys shares are down 10 per cent since July 14.
However, analysts told NDTV Profit that the weakness in Infosys shares is a good opportunity to accumulate the stock.
"The RBS deal accounts for just 0.4 per cent of Infosys' consolidated revenue... These are all normal business events, one should not give too much importance," said G Chokkalingam of Equinomics Research & Advisory.
SV Prasad of Chime Consulting said Infosys is the counter one should buy for exposure in the IT space. "Whenever it bounces, it bounces back very well," he added.
Infosys was the top Nifty50 loser today. As of 09.40 a.m., the stock traded off the day's low, down 1.8 per cent at Rs 1,042.95. Infosys underperformed the broader Nifty that traded flat.
However, analysts told NDTV Profit that the weakness in Infosys shares is a good opportunity to accumulate the stock.
"The RBS deal accounts for just 0.4 per cent of Infosys' consolidated revenue... These are all normal business events, one should not give too much importance," said G Chokkalingam of Equinomics Research & Advisory.
SV Prasad of Chime Consulting said Infosys is the counter one should buy for exposure in the IT space. "Whenever it bounces, it bounces back very well," he added.
Infosys was the top Nifty50 loser today. As of 09.40 a.m., the stock traded off the day's low, down 1.8 per cent at Rs 1,042.95. Infosys underperformed the broader Nifty that traded flat.
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