Infosys adds to IT gloom by cutting revenue forecast, shares fall 5%
India’s second largest software services exporter, Infosys, pulled down is revenue growth guidance for the current financial year to 8-9%, making it the second revision since it opened the year with a 11.5-13.5% forecast.business Updated: Oct 14, 2016 12:35 IST
India’s second largest software services exporter, Infosys, pulled down is revenue growth guidance for the current financial year to 8-9%, making it the second revision since it opened the year with a 11.5-13.5% forecast.
Just a few weeks back Infosys had shrunk the revenue growth projection for the year to 10.5-12%.
It was widely expected within the investing community that Infosys might further push down its growth projection to 9-9.5% in its results announcements Friday, but the company made it even lower. In response, its stock fell 5% in morning trade.
For the second quarter ended September 2016, Infosys reported a 4.9% jump in net profit on a quarter to quarter basis and 6.1% on a yearly basis to Rs 3,606 crore. Revenues during the quarter grew by 3.1% (quarter on quarter) and 10.7 per cent (year on year) to Rs 17,310 crore.
Infosys CEO Vishal Sikka said, “Considering our performance in the first half of the year and the near-term uncertain business outlook, we are revising our revenue guidance. Longer-term, I believe it’s increasingly clear that our industry’s future lies in evolving from a cost-based, people-only model, to one in which people are amplified by software and AI (artificial intelligence), and are freed to innovate in areas that are strategic to our clients’ future. And in this all-important transformation, I am glad to see us make continued progress.”
On Thursday, India’s largest software exporter Tata Consultancy Services reported a 4.3% increase in net profit at Rs 6,586 crore for the second quarter while it grew 8.8% on a year on year basis. Revenue growth during the quarter was nearly flat (0.1%) with total earnings at Rs Rs 29,284 crore, but grew at 7.8% on a year on year basis.
N Chandrasekaran, CEO and MD, TCS said: “It has been an ‘unusual Q2’ for TCS. Growing uncertainties in the environment is creating caution among customers and resulted in holdbacks in discretionary spending this quarter. In additional, volatility in markets like India and Latin America also muted revenue growth. It has been a good quarter from a profitability perspective where despite multiple headwinds our disciplined approach and focus on operations has helped us deliver a strong margin performance.”
For the first quarter ending June 2016, Infosys had reported a 4.5% decline in net profit to Rs 3,436 crore but recorded a year on year growth of 13.4 per cent. Revenue for the first quarter (against first quarter of last fiscal) grew by 1.4% quarter on quarter and 16.9% year on year to Rs 16,782 crore. Quarterly operating profits declined by 4.1% to Rs 4,047 crore but grew 17.4% year on year.
India’s third largest software services exporter Wipro is scheduled to annoucnce its second quarter results on next Friday (October 21).