IT scrips fall as Cognizant cuts growth forecast
Mumbai, May 3 (IANS) IT companies on the NSE fell steeply after the US-based IT services company revised down its revenue growth guidance and reported a disappointing March quarter earning result. Cognizant closed 7.72 per cent lower on Nasdaq.
At 2.14 p.m., the Nifty IT index was trading at 1.50 per cent lower. The sectoral index was the top loser among all other sectors with 8 out of 10 constituent companies trading in the red.
A Kotak Institutional Equities report said that Cognizant March 2019 quarter was disappointing on all counts. It delivered weak revenue growth, missed margin targets and reported a decline in cash generation in March 2019 quarter.
"Cognizant has cut CY2019 c/c revenue growth guidance to 3.6-5.1 per cent, down from 7-9 per cent at the beginning of the year citing weakness in banking, healthcare and weaker execution," the report said.
Kotak report further said that the Cognizant management indicated that revenue growth started weakening towards the second half of the quarter. The magnitude of miss for the quarter was surprising noting that guidance was laid out in the first week of February.
"The revenue miss was contributed by the slowdown in growth to a trickle in financial services (0.2 per cent yoy c/c growth, 1.5 per cent qoq USD revenue decline) and healthcare (+4.6 per cent yoy in c/c, negligible excluding Bolder acquisition and down 3.1 per cent qoq in USD terms). Other vertical continued robust performance."