Bangalore: Infosys Ltd has cut its FY13 growth forecast to 5% from the 8-10 % indicated in April, with revenue for the quarter ended June declining by 1.1% from the previous quarter to $1.75 billion.
While there had been expectations of a downward revision of the forecast because of unfavourable cross-currency movements in Western markets as well as weakness in demand, the magnitude of the revision surprised analysts and investors.
The stock was down nearly 9% to Rs2,248 at around 10:00 am. The IT index was pulled down over 5% to 5,375, while the benchmark Sensex was down a little over 1% to 17,284.
First quarter net income in dollar terms fell 10.2% to $416 million from the preceding quarter.
Infosys had forecast flattish-to-marginal growth in the June quarter, pegging dollar revenue at between $1.77 billion and $1.78 billion, thus again failing to meet its own conservative guidance.
The company did not provide a forecast for the September quarter, indicating extreme uncertainty in its outlook.
“This is very disappointing. A cut to 5% is worse than what we thought. And while environmental headwinds exist for everybody, clearly, the company is grappling with internal, company specific issues,” said Amneet Singh, country head of research firm Everest Group. “May be not all is well with key clients, there is client churn, and there are issues in the broader organization. And given that they are not guiding for the next quarter, I don’t think we can expect much from Infosys at this stage.”
In rupee terms, revenue for the June quarter was Rs 9,616 crore, marking 8.6% growth sequentially on the back of the depreciation of the rupee. Net profit fell 1.2% to Rs 2,289 crore.
Geographically, Europe declined by 8.1%, while North America grew by 1.6% sequentially.
Decline in the financial services space continued with a 1% sequential decline while manufacturing and retail and life sciences grew by 2.5% and 2.3%, respectively. Energy and communications declined by 8.2% sequentially.
Fifty-one clients were added during the quarter, and there was a net addition of 1,157 employees on a gross addition of 9,263 employees.
The company ended the quarter with cash and cash equivalents of $3.8 billion, with no acquisition in sight.