India’s second-largest software services exporter Infosys on Friday reported a lower-than-expected net profit for the fourth quarter, mainly due to cross-currency movements and continued pressure on pricing, sending its stock down 6% on the BSE.
This pulled down the benchmark Sensex by 297 points, or 1.1% to a three-month low of 27,437.94. The NSE Nifty fell 93.05 points, or 1.1%, to 8,305.
The Bangalore-based company, which forecast a 10-12% revenue growth during 2015-16, announced a 3.5% year-on-year rise in net profit to Rs 3,097 crore during the January-March quarter. Analysts had expected the IT major to report a net profit of Rs 3,186 crore.
Revenue rose 4.2% year-on-year to Rs 13,411 crore during the quarter.
Infosys announced a 1:1 bonus for employees, and said it would acquire US-based design firm Kallidus Inc for $120 million.
“Infosys results were softer than its other peers, which disappointed the Street,” said Abhishek Shindadkar, analyst at ICICI Direct.
In US dollar terms, the company’s revenue grew 3.2% during the quarter from a year ago.
“Services growth in the fourth quarter was lower than we expected… Pricing continues to be under pressure,” said UB Pravin Rao, chief operating officer.
Some analysts, however, are sceptical of the company’s growth guidance for 2015-16, which incidentally falls below industry body Nasscom’s estimate of 12-14%.
“Considering the headwinds and the fact Q4 growth was just 4.2%, achieving 10-12% revenue growth forecast may be difficult for Infosys, unless there is a sharp acceleration in Q1 and Q2,” Reliance Securities said.
Infosys, once a bellwether of the IT industry, has slipped in recent years. The company’s results cap what has been a disappointing quarter for India’s top IT services exporters including Tata Consultancy Services, HCL Technologies and Wipro.
“Despite being a challenging quarter, I am encouraged by the early successes in executing our renew-new strategy,” Infosys CEO Vishal Sikka said.
Apart from currency volatility, telecom and energy sectors have been softer than expected, which has hurt IT companies’ growth, analysts said. A slump in oil prices has hurt client spending in the energy sector.