FIIs, promoters pare stake in Infosys during Q3

Promoters and foreign institutional investors (FIIs) have reduced their stake in information technology (IT) major Infosys during the third quarter (Oct-Dec) of the current fiscal.

Total promoter holding in Infosys has declined by nearly 300 basis points to 13.8% at the end of the third quarter from 15.92% in the second quarter ended September 30, 2014. FIIs shareholding in the software giant has decreased by 109 basis points to 41.58% from 42.67% in past three months.

Infosys promoters have sold 32.6 million shares or 2.84% stake (post bonus issue) of the company in October-December quarter, as per the data available on BSE website. This is the sharpest quarterly stake sale by promoters in percentage terms during past one decade.

Earlier, in the quarter ended June 2004, the promoters reduced their holding by 4.5% in the company to 22.02% from 26.52% in the previous quarter ended March 31, 2004.

The board of directors had allotted bonus shares in the ratio of 1:1 i.e. one equity share for every one equity share held on December 4, 2014.

On December 8, 2014, Infosys co-founders N R Narayana Murthy, Nandan Nilekani, Dinesh K and S D Shibulal’s wife, Kumari Shibulal, along with their families, sold 32.6 million shares in the country’s second-largest information technology services company, for an overall amount of Rs 6,484 crore.

FIIs sold 12.5 million shares representing 1.09% stake in Infosys during the recently concluded quarter. Aberdeen Global Indian Equity (Mauritius) and Europacific Growth Fund holding in Infosys have declined below one percent.

Meanwhile, mutual funds and individual shareholders have raised their stake in the company by around 1% each. Mutual fund and UTI holding increased to 5.42% in December quarter from 4.75% at the end of September quarter, while individual shareholders hiked their stake to 9.78% from 9.06%. Foreign Portfolio Investor Corporate raised their stake to 1.38% against nil holding in previous quarter.

The stock has outperformed the market by gaining 4% as compared to 1% rise in the S&P BSE Sensex since September 30, 2014.

Infosys is schedule to announced its Q3 (October-December) quarter earnings on Friday, January 5, 2015.

Analysts at Credit Suisse expect Infosys EBIT margins to contract by 50 bp QoQ to 25.6% in Q3 FY15.

Infosys' EBIT margins expanded by 100 bp in 2Q FY15 and utilisation (including trainees) are now at the highest levels since June 2003. Given the company's focus on growth, we think there is little scope in the near term for utilisation expansion. Furthermore, investments in training and sales should weigh on margins, analysts said in a results preview.

With cross currency headwinds for two consecutive quarters, we believe that USD revenue growth in FY15 may settle at the lower end of the 7-9% guidance range, analysts add.