Infosys cuts revenue growth target

July 15, 2016 11:23 pm | Updated 11:23 pm IST - NEW DELHI:

Vishal Sikka

Vishal Sikka

Indian IT services giant Infosys Ltd warned it won't make its previous revenue target for this fiscal year, cutting its outlook after first-quarter earnings came in below estimates and Britain's vote to exit the European Union left the company with little visibility on future business prospects.

Shares in Infosys, India's second-largest IT firm, slumped as much as 10 per cent in Mumbai on Friday on the potential Brexit impact warning.

Infosys said it now expects revenue to grow between 10.5 per cent and 12 per cent in constant currency terms in the year ending March 31, 2017. It previously estimated growth of between 11.5 per cent and 13.5 per cent.

“As we look ahead to the future clearly (Brexit) is something that many banks are worried about and so forth,” said Chief Executive Officer Vishal Sikka. “In the near term we don't know how this will play out and so forth. So, given the visibility we lowered our guidance.”

Banking and financial services clients contribute a third of Infosys' revenue. The company gets about 23 per cent of its revenues from clients based in Europe, the lowest among peers including top Indian IT firm Tata Consultancy Services. Sikka said Britain's June 23 vote to leave the European Union hadn't affected the company so far. Infosys' consolidated net profit for the April-June quarter rose 13 percent to 34.36 billion Indian rupees ($513 million) from 30.3 billion rupees a year earlier.

Analysts’ estimates Analysts on average had expected a net profit of 34.42 billion rupees, according to data compiled by Thomson Reuters.

“We had unanticipated headwinds in discretionary spending in consulting services,” said Sikka, “as well as slower project ramp-ups in large deals that we had won in earlier quarters, resulting in a lower-than-expected growth in the first quarter.” Total clients grew 14 percent to 1,126 during the quarter.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.