Stocks

Infosys trims revenue forecast, sends shares skidding

Priya sundarajan | | Updated on: Oct 12, 2015

Infosys, India's second-largest software services exporter by revenue, cut on Monday its fiscal year 2016 revenue forecast as broad weakness in IT spending and a stronger dollar are making clients wary, sending its shares sliding as much as 5 per cent.

Infosys, reporting earnings for the second quarter, did not say why it cut the forecast to an expected increase in annual dollar revenues of 6.4 to 8.4 per cent. Earlier, the company had forecast 7.2 to 9.2 per cent growth.

On a constant currency basis, guidance was unchanged.

"We continue to see pricing challenges in large deals," Chief Operating Officer UB Pravin Rao said on a call with reporters.

"Pricing pressure is a reality in industry now."

In September, rival Accenture Plc gave a weak forecast for the first quarter, due mainly to a stronger dollar.

IT services companies such as Infosys, whose clients include Apple Inc and Wal-mart Stores Inc, make the lion's share of their money servicing clients in the United States. This means dollar revenues are a critical indicator for investors and the broader market.

Infosys also announced the departure of its chief financial officer, Rajiv Bansal. It did not give a reason for Bansal's leaving, but said he is being replaced by M.D. Ranganath, who is currently head of strategic operations, in charge of risk management, strategy and mergers and acquisitions.

Infosys shares briefly rose to a record high before reversing course and losing as much as 5 per cent.

Aneesh Srivastava,chief investment officer at IDBI Federal Life Insurance Co, said disappointment with the U.S. dollar revenue guidance and volume growth was weighing on the stock. "Dollar strength during last quarter has actually impacted revenue guidance," he said.

The company posted a second-quarter net profit of Rs 3,398 crore ($525 million) in the three months to Sept. 30, compared with Rs 3,096 crore a year ago.

Analysts, on average, had expected a net profit of Rs 3,289 crore, according to Thomson Reuters

Published on January 22, 2018

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