Infy sees revenue growth at lower end of forecast

Infosys today said that revenue growth for the 2014 fiscal would be at the lower end of its projected rate.

At a Barclays investor meet, SD Shibulal, CEO of India’s second largest software exporter, cautioned that sales growth would be at the lower end of its 9-10 per cent guidance as concerns linger over some of its clients’ spending on technology. In the second quarter results, the company had revised this guidance upwards from 6-10 per cent at the beginning of this fiscal, which had cheered the markets.

Infosys’ clients in the retail and manufacturing sectors are facing “spending pressure,” he said. “Many of the factors that have led to the recent slowdown will continue to impact client spending at least in the initial part of the 2015 fiscal year,” Shibulal said at the investors meet. Infosys stocks at the NSE ended the day at Rs. 3,671, about 4 per cent down.

IT analysts like Ankita Somani, at the end of first quarter of 2014 fiscal had said that a healthy first quarter performance increased the probability of achieving or bating the top end of the guidance.

Also, most analysts opine that profit margins of the company, which at one point was the highest, is coming under pressure due to lesser productivity of employees, inability to win big deals, its investments in Infosys 3.0 strategy, wage hikes and higher visa costs. Employee productivity, measured in the form of utilisation is 71.4 per cent in March this year, lower than 80 per cent utilisation that the company clocked in December 2010.

Meanwhile, Mauritius Post and Cooperative Bank (MPCB) has upgraded its core banking solution to Infosys’ Finacle 10.

The new version of Finacle allows the bank to offer a wide array of lending products and other banking services to meet the diverse needs of its retail and corporate customers, the company said in a statement.

“Finacle 10 is geared to support MPCB’s ambitious growth plans. It allows MPCB to develop and launch products faster to meet rapidly changing customer needs,” Infosys said.

The new version of the core banking solution was deployed in 10 months, five weeks ahead of the schedule, with no budget over-runs, it added.