Infosys will miss its dollar guidance for the current year. The dollar earnings per share (EPS) guidance for FY09 has been lowered from $2.32-2.36 come down to $2.24, which is about 5 per cent lower.
That means earnings will grow by 10 per cent in the current year, against 14-16 per cent expected earlier. This is probably the first time Infosys has scaled back its guidance both for revenues and profits.
The revenue guidance is now down from $5.05 billion to $4.72--4.81 billion, again about a five per cent fall. So that means revenues will grow by about 15 per cent in FY09 compared with the 19-21 per cent expected earlier.
The Q2FY09 numbers for the were a tad better than expectations - revenues up 11.6 per cent sequentially at Rs 5,418 crore and the net profit up 10 per cent at Rs 1,432 crore.
The lower guidance was probably expected given the way the global financial crisis is unfolding. Spends on IT are no doubt, going to come off as the major global economies slip into a recession.
Moreover, since Indian vendors have a fairly high exposure to the banking and financial services space, they are currently very vulnerable given the bankruptcies in this sector. While there is little chance of billing rates going up - they could fall - it will be difficult for IT services players to grow volumes too.
The Infosys stock has lost about 30 per cent in the last three months. The stock opened 13 per cent per cent lower at Rs 1,090 in today trades.
