India's IT bellwether Infosys Ltd shares plunged nearly 13 per cent on the back of a slower-than- expected growth outlook.
Infosys' dollar revenue guidance of $7,553-7,692 million, representing a full year growth of 8 –10 per cent, is much lower than the Nasscom estimate of 11-14 per cent for the $100-billion outsourcing industry in FY13.
The Infosys guidance showed that the entire domestic IT industry will have a difficult year ahead.
The Infosys CEO and Managing Director, Mr S. D. Shibulal, told a news conference that “delay in new contract closures, slowness in anticipated ramp ups of existing projects, leadership changes in some of our existing North American customers and continued delays in decision making” were some of the issues which led to the lower guidance.
On a sequential basis, Infosys' net profit fell 2.4 per cent to Rs 2,316 crore while revenues decreased 4.8 per cent to Rs 9,298 crore. On a year-on-year basis, net profit grew 27 per cent while revenues grew 24 per cent. Convergence of multiple events at the end of March this year led to this dip, which in turn has resulted in a lower guidance for FY 13, Mr Shibulal said. This can be seen by the contribution of North America, which in FY12 saw growth reduced by 1.3 per cent over the last fiscal and now contributes 62.4 per cent of Infosys' revenues as compared to 63.7 per cent in FY 2011.
“Ramp down in certain projects in financial services industry, especially in North America, resulted in this disappointing guidance,” said Ms Ankita Somain, Analyst at Angel Broking. Despite this gloomy economic climate, the company has added 52 clients in the fourth quarter of FY12, which is the highest in the last five years, according to company officials.
The board has recommended a dividend of Rs 22 a share for FY 12 and a special dividend of Rs 10 a share on account of ten years of completion of its BPO arm. Pricing on its projects went up by 4.7 per cent over 2012 fiscal.
“Guidance has been disappointing but we feel that this will be the trend of the industry. The sector should brace for 10 per cent growth,” Mr Sundararaman Viswanathan, Manager- Consulting, Zinnov, said.