Infosys cuts FY12 revenue guidance, stock tumbles

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Infosys cuts FY12 revenue guidance, stock tumbles

Technology bellwether Infosys reported a better than expected third quarter consolidated net profit of Rs 2,372 crore up 33.3% from a year ago. However, it cut its US dollar revenue guidance for the full year amid worries that a global economic downturn led by the eurozone debt crisis could hurt demand.

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Technology bellwether Infosys reported a better than expected third quarter consolidated net profit of Rs 2,372 crore up 33.3% from a year ago. However, it cut its US dollar revenue guidance for the full year and fourth quarter forecast was also flattish, amid worries that a global economic downturn led by the eurozone debt crisis could hurt demand.

Infosys' October-December revenue was up 31% year-on-year to Rs 9,298 crore. A CNBC-TV18 poll of analysts had expected Infosys' third quarter net profit at Rs 2,322 crore, on revenue of Rs 9.223 crore.

The guidance disappointed the street, Infosys shares opened down over 6% at Rs 2,636.75.

CLSA said, while third quarter numbers were in-line with expectations, the fourth quarter and fiscal year forecast was a big disappointment.

Cowen & Co said budget cuts reflected in the weak guidance for the fiscal.

In the US dollar terms, fiscal year revenue is expected to grow 16.4% from a year ago at USD 7.029-7.033 billion, Infosys said on Thursday. The Bangalore-based software services provider had earlier guided for a revenue growth of 17.1-19.1% to USD 7.08-7.20 billion.

Infosys raised EPS [earnings per share] guidance for the fiscal to Rs 147.13 versus Rs 143.02-145.26 earlier, but that was too below analysts' expectations of around Rs 150.

"The global economy, driven by slower growth in developed markets coupled with the European crisis, could impact the growth of the IT industry," said SD Shibulal, CEO and MD.

For the fourth quarter [January-March], Infosys expects earnings to grow 15.70% year-on-year to USD 0.81 per ADS. Revenue is expected to grow 12.7-13.0% to USD 1.806-1.810 billion.

In rupee terms, Infosys sees full year revenue at Rs 34,273-34,294 crore, up 24.6-24.7% from a year ago. Jan-March revenue is expected to rise 29.50-29.80% to Rs 9,391-9,412 crore.

Infosys' EBIT margin in the third quarter was at 31.17%, compared with 28.16% in the second quarter and higher than the CNBC-TV18 poll of 30.2%.

Infosys and its subsidiaries added 49 clients during the third quarter. There was a net addition of 3,266 employees. Infosys and its subsidiaries have 1,45,088 employees as of Dec 31.

"Notwithstanding short-term challenges, we are focused on long-term growth opportunities by investing in platforms and solutions - which will accelerate innovation, enhance returns for our clients and deliver higher business value," Shibulal said.

Nachiket Kelkar
nachiket.kelkar@network18online.com