Infosys Ltd., India’s second largest software exporter, said it had revised its annual revenue guidance for the financial year 2016-17 for the second time in three months on “near-term uncertain business outlook.”
Revenue guidance
“Considering our performance in the first half of the year and the near-term uncertain business outlook, we are revising our revenue guidance,” said Vishal Sikka, Chief Executive Officer of Infosys. Infosys, which gave a revenue growth guidance of between 10.5 per cent-12 per cent in constant currency during the first quarter, has cut the same to about 8-9 per cent for the full year, which is lower than industry estimates. IT industry body National Association of Software and Services Companies (Nasscom) had predicted Indian IT exports to grow 10-12 per cent in constant currency terms in FY17.
The company reported a 6.1 per cent growth in net profit to Rs.3,606 crore for the second quarter ended September 30, compared with the same period the previous year, beating analysts expectations.
Total revenue for the July-September period stood at Rs.17,310 crore, registering a growth of 10.7 per cent.
Infosys fell to a 52-week low of Rs.996.15 on the BSE due to the revised revenue guidance and closed at Rs.1,027.40 down 2.3 per cent.
“We are simply saying like we see it. In the near terms there are lots of factors that affect our performance,” Mr. Sikka said.
“We had a major client where a large scale programme had an abrupt ramp down which we are in the middle of now. The other clients here and there with some ramp down. Things like this affect our near-term performance.”
In sequential terms the Bengaluru-headquartered company’s revenue performance was better than India’s largest IT exporter Tata Consultancy Services (TCS).
In constant currency terms Infosys witnessed a quarter-on-quarter revenue growth of 3.9 per cent while TCS registered a growth of one per cent.
Brexit impact
“The reduction in forecast performance of Infosys signifies the acceptance of the consequences of global headwinds arising from macroeconomic factors, reduction in large scale global IT projects and uncertainties of Brexit,” said Sanjoy Sen, Doctoral Research Scholar, Aston Business School
Operating margins
The July-September operating margins expanded 80 bps sequentially to 24.9 per cent and the volume grew 4 per cent during the quarter.
“Our margins expanded during the quarter on the back of further improvement in operational efficiency,” said M.D. Ranganath, Chief Financial Officer, Infosys.
