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While it reported second-quarter net profit grew 6.1 percent,
the second-largest player in India's $150 billion-plus software
services outsourcing industry said on Friday it now expects
revenue to grow between 8 percent and 9 percent in constant
currency terms in the fiscal year through March 2017.
The lowered outlook initially startled investors, sending shares
more than 5 percent lower before they pared losses. Infosys had
cut its guidance as recently as July, to 10.5-12 percent growth,
warning in August it was seeing some "softness" after Britain
voted to leave the European Union in June.
Firms like Infosys and industry leader Tata Consultancy Services
Ltd (TCS) <TCS.NS> depend on North America and Europe for the
majority of their revenue. TCS on Thursday reported
lower-than-expected revenue growth and warned clients were
delaying spending.
"During the course of Q2 we have seen signs of cautious client
behavior," Infosys Chief Executive Vishal Sikka said on a
conference call. Royal Bank of Scotland's <RBS.L> decision to
shelve a plan to list a new bank in Britain, for which Infosys
was a technology partner, also contributed to the lowering of
revenue guidance, Sikka said.
At 0921 GMT, the firm's shares were trading 1.9 percent lower.
Investors took the view that a sector that is a showpiece of the
Indian economy is still well placed in the longer term.
"We don't believe that the structural story of outsourcing has
changed," said Nilesh Shetty, a fund manager at Quantum Asset
Management Company Pvt Ltd. "The engineering talent in India is
still priced a lot lower than the developed world."
For its fiscal second quarter ended September, Infosys said
consolidated net profit rose to 36.06 billion rupees ($542
million) under Ind AS accounting standards, ahead of analysts'
estimates of 35.26 billion rupees.
Revenue rose 10.7 percent to 173.1 billion rupees.
The company added 78 clients during the three months to
September, taking its total number of active clients to 1,136.
($1 = 66.5919 Indian rupees)
(Additional reporting by Promit Mukherjee and Devidutta Tripathy
in Mumbai, Laharee Chatterjee in Bengaluru; Editing by Kenneth
Maxwell)
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