Analysis of Infosys share price plunge: Impact on Murthy family, reasons for decline, analyst views, and broader IT sector pressures. Stay informed.
Infosys Ltd shares experienced a significant downturn, triggering concerns among investors. This article provides a detailed analysis of the recent events impacting Infosys’ share price, drawing upon available data and reports.
On Wednesday, Infosys shares tumbled 5.5%, marking an extension of a two-day slide that exceeded 8%. This sharp decline has officially placed the IT giant in bear market territory. The market capitalization also witnessed a major fall.
Impact on Narayana Murthy’s Family Wealth
The Infosys stock’s slump has notably impacted the wealth of co-founder Narayana Murthy and his family. An estimated Rs 6,875 crore was erased from their notional wealth as a result of the stock’s poor performance. The family collectively holds a 4.02% stake in Infosys. Their holdings decreased from Rs 33,163 crore in mid-December to Rs 26,287 crore. Individually, Murthy’s 0.40% stake is now valued at Rs 3,299.79 crore, a decrease of Rs 684 crore. Sudha Murty, his wife, holds a 0.92% stake valued at Rs 7,600.41 crore, down Rs 1,573.54 crore. Rohan Murty, their son, with a 1.62% stake, saw a reduction of Rs 2,771 crore, bringing his stake’s value to Rs 13,378.5 crore. Akshata Murty, Narayana Murthy’s daughter, holds a 1.04% stake, now worth Rs 8,591 crore after a Rs 1,779 crore decline. Even Ekagrah Rohan Murty, Narayana Murthy’s grandson, holding a marginal 0.04% stake, was impacted by the stock’s fall.
Factors Contributing to the Decline
Several factors appear to be contributing to the decline in Infosys’ share price. The stock’s recent low was Rs 1,563.80, nearly 22% lower than its 52-week peak of Rs 2,006.80 recorded in December 2024. Brokerage downgrades, spurred by concerns over slowing IT spending in the U.S. and challenging macroeconomic conditions, are significant factors. Morgan Stanley, for instance, downgraded Infosys to ‘equal-weight’ and reduced its target price from Rs 2,150 to Rs 1,740, citing risks to revenue growth and valuation multiples.
Broader IT Sector Impact
The downturn isn’t limited to Infosys alone. The broader IT sector is under pressure, as reflected by the Nifty IT index sinking 4% and entering bear market territory, down over 21% from its peak. Other major IT companies, including Wipro and HCL Tech, have also experienced sell-offs, mirroring the wider concerns affecting the industry.
Analyst Perspectives
Despite the negative trend, some analysts remain optimistic about Infosys’ prospects. CLSA recently upgraded Infosys to ‘accumulate,’ setting a target price of Rs 1,978. According to Trendlyne data, 28 out of 40 analysts tracking the stock still maintain a ‘buy’ rating. However, the prevailing sentiment suggests caution, given fears of a U.S. recession and potential AI-driven disruptions clouding the outlook for India’s IT sector.
Morgan Stanley’s Downgrade Rationale
Morgan Stanley’s downgrade reflects a broader concern about the IT services sector. They prefer Tata Consultancy Services (TCS) over Infosys, Tech Mahindra over HCL Technologies, and Coforge over Mphasis. The brokerage maintains an ‘Overweight’ rating for Coforge but reduced the price target from ₹11,500 to ₹9,400. Similarly, while retaining an ‘Overweight’ stance on TCS, the brokerage reduced the price target from ₹4,660 to ₹3,950. HCL Technologies and Tech Mahindra have been assigned an ‘Equalweight’ rating, with price targets revised down to ₹1,600 from ₹1,970 and ₹1,550 from ₹1,750, respectively.
Broader Market Pressures
The Indian IT stocks face pressure from an expected slowdown in the US economy and uncertainty surrounding US trade policy. The Nifty IT index settled 0.65% lower on Tuesday at 37,400.10, underscoring the widespread challenges within the sector.
Concluding Remarks
In summary, Infosys’ share price decline is attributed to a combination of factors, including brokerage downgrades, concerns about IT spending in the U.S., and broader macroeconomic headwinds. While some analysts remain positive, investors are advised to brace for continued volatility given the prevailing market uncertainties.
Sources: https://m.economictimes.com/markets/stocks/news/narayana-murthys-family-wealth-erodes-by-nearly-rs-6800-crore-as-infosys-enters-bear-market/articleshow/118926611.cms
https://upstox.com/news/market-news/stocks/infosys-hcl-tech-wipro-shares-plunge-here-s-why-it-shares-are-falling/article-152171/
https://www.cnbctv18.com/market/it-stocks-morgan-stanley-prefers-tcs-over-infosys-cuts-price-targets-of-four-other-stocks-19572348.htm