IT major Infosys announced on Tuesday that its revenue growth forecast for 2014-15 would be 7 to 9 per cent in dollar terms, well behind NASSCOM’s guidance of 13-15 per cent for the overall software services industry. The guidance, which was marginally better than market expectations, sent the company’s stock up by about 3.6 per cent in the first half of the day but the picture reversed in the second half and the share closed the day with a marginal increase of 0.7 per cent.
The lowered forecast, which the second largest IT exporter attributes to a “low momentum in the previous two quarters”, comes even as the company finished at the lower end of its annual revenue guidance at 11.5 per cent.
In dollar terms, net profits at the company grew by 11.5 per cent in 2013-14, while the growth figures in rupee terms — owing to the depreciation in the value of the rupee against the dollar — was pegged at 24.2 per cent. These numbers are also significantly lower than the industry’s growth this fiscal estimated at 13 per cent. In rupee terms, revenues are expected to grow 5.6-7.6 per cent.
The company announced a net profit of Rs. 2,992 crore for the quarter ended March, marking a sequential growth of 4.1 per cent and a growth of 25 per cent compared to the year-ago quarter. Infosys reported revenues of Rs. 50,133 crore for the first time, crossing the Rs. 50,000-crore mark, up by 24.2 per cent compared to the previous financial year.
Addressing the media after announcing the results, Infosys CEO S.D. Shibulal said that while performance continued to be an issue having finished a “disappointing quarter”, he was pleased that the company had been able to double annual growth rate compared to the previous year. “With this, we are already on track to bridging the gap with the industry growth rates, and will continue to make necessary investments in our business to accelerate this,” he added.
He said that he expected the weakness of the previous two quarters to continue into the next fiscal. “At this stage, we cannot say if this weakness will remain for half the year or for the entire year. This is based on what it is now.”
He said that the clients’ appetite for discretionary spend continued to be low which remained a challenge.
For the second consecutive quarter, the company’s revenues from North America showed a decline with a sequential drop of 0.8 per cent, while revenues from European markets saw a growth of around 1 per cent.
Infosys’ president and board member U.B. Pravin Rao said that over the last two quarters the company had been seeing positive momentum in Europe. Corporates from continental Europe had been showing more willingness to offshore work with an Indian vendor, perhaps owing to economic conditions, he added. “U.S. is less of a secular trend as it is about current volatility in environment and decrease in discretionary spend. But we are not too worried,” he pointed out.
Infosys ADRs were quoting at $51.82, down by 6.77 per cent on the New York Stock Exchange on Tuesday in the afternoon trade.