Infosys shares could fall sharply on Tuesday when the stock exchanges re-open after an extended weekend after one of its clients — Royal Bank of Scotland — cancelled a key project in which over 3,000 Infosys employees were deployed.
RBS has scrapped plans to hive off and list Williams & Glyn (W&G) as a separate entity. Instead, it will be exploring options to sell it to another lender. Infosys, along with IBM, had won a project in September 2013 to develop computer systems for W&G for an estimated Rs. 2,500 crore.
"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," the Bengaluru-based IT software services exporter said in a statement last Saturday (August 13).
"The Royal Bank of Scotland announced last week that it will no longer pursue its plan to separate and list a new UK standalone bank, Williams & Glyn (W&G), and instead will pursue other options for the divestment of this business. RBS is a key relationship for Infosys and the company looks forward to further strengthening our strategic partnership and working with them across other strategic and transformation programs," Infosys added.
Infosys shares closed at Rs. 1,063.30 apiece, down 1.28 percent, on Friday on the Bombay Stock Exchange.
The company's first quarter (Q1) results were perceived as disappointing by analysts and investors and its decision to scale down the revenue guidance for the current fiscal sent the share crashing almost 10 percent on the day.
Infosys lowered its FY2017 revenue guidance to 10.5-12 percent from 11.5-13.5 percent earlier. After the company announced its guidance on July 15, the Infosys stock fell to Rs. 1,060, a loss of 9.78 percent from its previous closing.
The company's June 2016 quarter consolidated net profit was $511 million on revenues of $2,501 million, translating into revenue growth of 10.9 percent on a year-on-year (YoY) basis and 12.1 percent in constant currency terms.