Infosys cuts growth forecast on Europe
Bangalore, January 12, 2012
Infosys Ltd cut its full-year revenue outlook because of the debt crisis in Europe, sending down the shares of the No 2 Indian software services exporter by as much as 7.7 percent to their lowest in more than a month.
India's export-driven software services companies are bracing for a slower pace of outsourcing contracts due to the troubles in Europe, Infosys's second-biggest market.
Bangalore-based Infosys forecast dollar revenue growth of 16.4 percent for the fiscal year to March 31, down from 17.1 percent to 19.1 percent projected in October.
The company, however, managed to beat street forecasts with a 33 percent rise in its fiscal third-quarter profit as a weak rupee boosted margins.
Infosys, which is also listed in New York, said consolidated net profit rose to 23.72 billion rupees ($457 million) in the third quarter ended December 31 from 17.8 billion rupees a year earlier, helped by an 8 percent fall in the rupee.
Revenue rose 30.8 percent to 92.98 billion rupees, as the company, whose customers include BP, Procter & Gamble Co and Volkswagen AG, added 49 clients -- its strongest pace of client addition in more than three years.
"The outlook of Infosys this year will depend largely on the US and European markets, which contribute more than half of its revenues combined," said Michael Huang, manager of Yuanta India Fund at Yuanta Securities Investment Trust in Taipei.
"Its prospect might not be as good as it has been over the last few years. But in the longer term, this is a company that has a solid track record of its management and financial quality," said Huang whose fund owns Infosys shares.
Infosys shares were down 6.4 percent at 2,646 rupees by 0406 GMT, after falling nearly 8 percent to their lowest since November
30. The overall market was down 0.2 percent.
"The reduction in its dollar revenue guidance is a matter of concern," said Dhananjay Mishra, an analyst with brokerage Sushil Finance in Mumbai.
Global spending on information technology will rise at the slowest pace in three years in 2012 as Europeans, worried about the region's sovereign debt crisis, are cutting back on investments, research firm Gartner said last week.
Gartner predicted global IT spending would rise 3.7 percent in 2012, down from its earlier estimate of 4.6 percent. The forecast for Western Europe was slashed to a 0.7 percent drop in spending from a previously expected rise of 3.4 percent.
"The global economy, driven by slower growth in developed markets coupled with the European crisis, could impact the growth of the IT industry," Infosys chief executive S D
Shibulal said in a statement.
India's $76 billion IT services industry competes with Accenture and IBM for orders to maintain information technology infrastructure and build software applications. More than half of Infosys's revenue is generated from the US. - Reuters