INFOSYS, INDIA’S second- largest software-services exporter, slumped the most in almost three years in Mumbai trading after forecasting sales that missed analyst estimates.
Sales in the year that began on April 1st may be between 384.3 billion rupees (€5.7 billion) and 391.4 billion rupees, said Infosys.
That lagged the 396.3 billion-rupee median of 64 analysts’ estimates compiled by Bloomberg. Infosys also reported fourth- quarter sales that trailed estimates.
Indian software exporters Tata Consultancy Services and Wipro tumbled the most in six months after Infosys chief executive officer SD Shibulal said the year ahead “looks challenging” for information-technology services. Amid outsourcing deals that are taking longer to finalise, researcher Gartner this month cut its estimate for 2012 global industry spending growth, citing the dollar’s gains.
“It’s a shocker,” said Ankita Somani, an analyst at Angel Broking. “The results are very bad, the guidance is . . . disappointing. They are guiding less than the rate at which the industry will grow.”
India’s software industry is estimated to grow between 11 per cent and 14 per cent. And Infosys’s guidance is lower than that, said Somani.
“We had seen unprecedented convergence of various phenomena – we’ve seen contract delays . . . we have seen ramp-downs in specific cases – especially in financial services and in North America,” Mr Shibulal told reporters at a briefing. “The budgets for next year are closed, marginally down or flat. But what we’re finding, especially in the financial services sector, is that spending seems to be almost month to month.”
Infosys’s sales in the year ending March 31st in US dollar terms may range from $7.55 billion to $7.69 billion, and earnings per American depository share may be in the range of $3.12 to $3.17, according to the statement.
“I think Infosys’s business model is likely to face challenges from two fronts: their smaller, nimbler competitors like Cognizant who accept lower margins are getting better at delivery,” said Ankur Rudra, the top-ranked Infosys analyst who rates Infosys a sell. – (Bloomberg)
