Infosys cuts revenue forecast for 2017-18
Bengaluru: Infosys Ltd cut its full-year revenue guidance on Tuesday, blaming poor spending by its largest customers, as India’s second largest outsourcing firm struggles to regain the growth momentum that once made it India’s information technology bellwether.
The Bengaluru-based company now expects revenue to grow at-best 6.5% in constant currency terms in the year to next March. In July, Infosys had forecast constant-currency growth of 6.5-8.5%. On Tuesday, Infosys forecast actual dollar revenue growth of 6.5-7.5%, down from July’s projection of 7.1-9.1%.
In a quarter that Infosys lost its chief executive Vishal Sikka, who quit after a tumultuous three years in the job, overhauled its board and brought back co-founder and former CEO Nandan Nilekani to stabilize the company, growth was crimped by weak spending by clients in India and below-par spending by customers in North America.
A weak growth outlook amid uncertainty over when Infosys expects to appoint a full-time CEO probably suggests that the worst is not over for Infosys and Nilekani has a challenging task on hand.
The company’s dollar revenue grew 2.9% on a sequential basis (2.2% in constant currency terms) and 6% from a year ago to $2.73 billion. Net profit improved 7% to $578 million from $541 million in the June quarter, and 7.3% year-on-year. In rupee terms, revenue increased sequentially by 2.9% and 1.5% year-on-year to Rs17,567 crore. Net profit improved 7% on a sequential basis and 3.4% year-on-year to Rs3,726 crore.
“Guidance revised downwards indicates a weak 2H (second half),” analysts Anantha Narayan and Nitin Jain of Credit Suisse wrote in a note to investors after Infosys . “While street was expecting some reduction, the revised guidance is clearly below expectations.”
Still, the management put up a brave face, with Nilekani expressing satisfaction at Infosys’s performance.
He congratulated interim CEO U.B. Pravin Rao and his colleagues for delivering “outstanding results, good profitability, large number of new deals” in a quarter when there was “a fair amount of turbulence”.
The results were declared after market hours. Infosys’s American Depository Receipts (ADRs) were trading down 3.3% at $14.34 at 8.31pm IST.