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Infosys forecasts tepid revenue growth, shares dive

By Reuters

  • 12 Apr 2013
Infosys forecasts tepid revenue growth, shares dive

Infosys Ltd, India's No. 2 IT services exporter, forecast lower revenue growth than analysts had expected for this fiscal year, citing a challenging global economy, sending its shares tumbling nearly 18 per cent.

The company said it expects dollar revenue for the fiscal year that began this month to grow between 6 per cent and 10 per cent. Most analysts had estimated that Infosys would set a target for revenue growth of as much as 12 per cent.

Infosys has been focusing on stepping up sales, with a willingness to sacrifice margins, to help it win business and halt its loss of market share.

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For about two years, Infosys, a bellwether of India's $108 billion IT services sector, had been losing market share to more aggressive rivals such as industry leader Tata Consultancy Services Ltd (TCS) and No. 4 HCL Technologies Ltd.

The rough patch was caused in part by the challenge of implementing its "Infosys 3.0" push for revenue through the development of its own software platforms, to differentiate its services from those of its competitors, amid sluggish demand from clients in its core western markets.

"The forecast looks quite conservative, which is a concern. The fiscal 2013 was also not very good for Infosys," said K.K. Mital, CEO for portfolio management services at Globe Capital in New Delhi.

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"This looks like company specific problem. Even mid-cap companies are expected to perform better than this."

Consolidated net profit for the fiscal fourth quarter ended March 31 was 23.9 billion rupees, compared with 23.16 billion in the same period a year earlier. Revenue for the quarter rose 18 percent to 104.5 billion rupees.

That compared with an average estimate of 23 billion rupees in a survey of 18 analysts by Thomson Reuters I/B/E/S. Revenue was expected to have risen 21 per cent to 107 billion rupees.

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Infosys also said it would set aside up to $100 million to invest in products, platforms and solutions ideas.

Shares of the company, valued at about $30 billion, gained nearly 26 per cent so far this year as of Thursday after falling 16 per cent in 2012.

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