In early trade on the NSE, Infosys share price experienced a drop of almost 3% on Tuesday, December 26, following the company’s announcement on Saturday, December 23, regarding the termination of its $1.5 billion agreement with an undisclosed global company specializing in artificial intelligence (AI) solutions, a deal signed in September.
As per the exchange filing on Saturday, Infosys stated, “This is in continuation to the disclosure made by Infosys via a letter dated September 14, 2023, titled ‘Company Update’ with respect to a Memorandum of Understanding with a global company which was subject to parties entering into a Master Agreement. The global company has now elected to terminate the Memorandum of Understanding, and the parties will not be pursuing the Master Agreement.”
The initial plan for the agreement between Infosys and the global company was a 15-year commitment, with the Memorandum of Understanding (MoU) signed on September 14, 2023.
“Infosys has entered into a Memorandum of Understanding with a global company to provide enhanced digital experiences, along with modernization and business operations services, leveraging Infosys platforms & AI solutions. The total client target spend over 15 years is estimated at USD 1.5 billion. This is subject to parties entering into a master agreement,” stated the company in an exchange filing made in September.
The termination of this deal adds pressure on Infosys and other IT companies in India, already facing challenges due to muted business over the past three to four quarters.
Infosys shares opened at ₹1,535 against the previous close of ₹1,562.90 and subsequently dropped 2.6% to ₹1,523.
Around 9:20 am, Infosys share price traded 1.77% lower at ₹1,535.20.
This decline in Infosys share price contributed to dragging the Nifty IT index lower by almost one percent, making it the sole loser among sectoral indices around 9:20 am.
Despite this setback, Infosys share price has gained nearly 4% while the Nifty 50 is up nearly 18% for the year so far.
Infosys is scheduled to announce its Q3FY24 financial results on January 11, following a board of directors meeting commencing on January 10.
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