(new: share performance and analysts' opinions)

MUNICH (dpa-AFX) - IT service provider Nagarro expects a lower increase in sales in the current year than previously. The company, which is listed on the SDax, announced on Friday evening after the close of the stock exchange in Munich that its earnings should only increase to 940 million euros. Nagarro had previously set out to crack the billion euro mark this year after sales of 856 million euros in 2022. The share came under considerable pressure. The figures for the first quarter on Monday morning did not give the paper any support.

However, the gross margin for the current year is expected to remain at 28 percent, and the Management Board also confirmed its target of an operating margin based on earnings before interest, taxes, depreciation and amortization (Ebitda) adjusted for special items of 15 percent. Both figures would thus be slightly below the 2022 level. In arithmetical terms, the sales and margin forecast results in an adjusted operating profit of 141 million euros in the current year, slightly less than in 2022.

In the first three months, sales increased by around 24 percent to 229.5 million euros, as Nagarro announced on Monday. Earnings before interest, taxes, depreciation and amortization (Ebitda), adjusted for special items, rose 8 percent to 31.4 million euros. As sales grew faster than operating profit, the margin fell by almost two percentage points to 13.7 percent. On balance, Nagarro earned around 15 million euros in the first three months, around 9 percent more than a year ago.

According to Borsian, the new sales target for the year is clearly below analysts' estimates. The confirmed forecast for the adjusted operating profit margin (Ebitda) also falls short of expectations. After Nagarro raised its outlook seven times in a row, this is now the first cut since Borsen went public at the end of 2020, added Jefferies analyst Martin Comtesse. While he continues to advise buying the stock, as he believes it is overdue to catch up with its peers in terms of valuation. However, it is likely to remain under pressure in the short term due to the difficulty in predicting demand.

Nagarro shares plunged more than 11 percent to 82.25 euros Monday morning after the company lowered its sales forecast. The stock thus plunged to a low since the beginning of 2021, when the price of the company, which was spun off from IT group Allgeier in 2020 and listed on the stock exchange, had even fallen to 70 euros.

After this low, the share price recovered significantly and climbed again to more than 130 euros at the beginning of February. Since then, however, the share price has again fallen rapidly after the forecast for the current year fell well short of analysts' and investors' expectations. The share is now miles away from its record high of 212 euros at the beginning of 2022.

However, the share price is still slightly higher than on the first day of trading in December 2020, when the first price determined by the stock exchange was 69 euros. The company, which has around 18,000 employees, is currently valued at 1.3 billion euros./ngu/zb/niw/jsl/stk