Infosys meets Q1 forecasts, but cuts FY13 outlook

INDIA-INFOSYS-RESULTS:Infosys meets Q1 forecasts, but cuts FY13 outlook

Infosys Ltd. cut its sales outlook for this fiscal year amid worries clients will reduce spending on outsourcing services due to global economic uncertainty, sending its shares down nearly 9 percent.

The prevailing dim global economic climate, cutthroat competition for a bigger share of the outsourcing business and sharp currency fluctuations have slowed the pace of growth for Indian outsourcing companies.

Infosys, India's No.2 software services exporter, sees its revenue in dollar terms rising 5 percent to $7.34 billion in the year to March 2013, down from its April estimate of 8-10 percent growth.

Most analysts were expecting Infosys to trim its sale growth outlook to 6-8 percent. The company met expectations with a 33 percent rise in its fiscal first-quarter profit.

 

"Everything is poor in Infosys results and this kind of guidance cut will definitely materialise into further derating of the stock," said Harit Shah, a senior research analyst at Nirmal Bang Institutional Equities in Mumbai.

Shares of Infosys, valued at about $25.5 billion, fell 10.2 percent to 2,219 rupees after the results, dragging the Nifty down 1.3 percent and the Nifty IT index to 5.5 percent.

Net profit for Infosys, whose customers include Bank of America , BT Group and GlaxoSmithKline Plc , rose to 22.89 billion rupees in the quarter ended June from 17.2 billion rupees a year earlier.

Analysts had forecast a net profit of 23 billion rupees for the Bangalore-based company, according to Thomson Reuters data.

Revenue rose 28.5 percent to 96.16 billion rupees as Infosys added 51 new clients in the first quarter, the company said.

Tata Consultancy Services , India's top software exporter, is expected to post a nearly 25 percent rise in net profit for the June quarter to 29.7 billion rupees, according to Thomson Reuters data. The company reports later on Thursday.

India's $100 billion-a-year IT and back-office outsourcing sector earns about three-quarters of its revenues from customers in the United States and Europe and faces intense competition from global rivals including IBM and Accenture .

Infosys and its domestic rivals, Tata Consultancy and Wipro , are part of the country's export-driven outsourcing sector that has benefited from an increase in demand for outsourcing to cut costs and boost efficiency.

(Reporting By Harichandan Arakali; Editing by Matt Driskill)