Infosys cuts FY12 forecast

MUMBAI, INDIA: Infosys Ltd, India's No. 2 software services exporter, cut its full-year revenue outlook because of the debt crisis in Europe, its second-biggest market, although its 33.3 per cent rise in third-quarter profit beat forecasts.

Its stock dropped 7 per cent in early trading.

Infosys forecast dollar revenue growth of 16.4 per cent for the fiscal year to March 31, down from the 17.1 per cent to 19.1 per cent projected in October. Consolidated net profit rose to 23.72 billion rupees from 17.8 billion rupees a year earlier. Revenue rose 30.8 per cent to 92.98 billion rupees.

A Reuters poll of 10 brokerages had forecast a profit of 23.1 billion rupees on revenue of 92.2 billion rupees.

COMMENTARY:

DHANANJAY MISHRA, IT ANALYST, SUSHIL FINANCE, MUMBAI

"The reduction in its dollar revenue guidance is a matter of concern. One reason could be delays or reductions in (its) client budgets, because of which the company has taken a conservative view. Going forward we will need to see what deals it closes in the next quarter, and watch the level of recruitment."

MANISH SONTHALIA, FUND MANAGER, MOTILAL OSWAL AMC, MUMBAI

"The current rupee numbers are better than expected, but they have scaled down the dollar revenue guidance, which is a disappointment. This means the fourth-quarter numbers are likely to be flat, and a lot will depend on how the rupee moves.

"There may be a knee-jerk reaction in the stock, maybe 4 to 5 per cent, but I don't think there is a case for re-rating the stock or the sector yet."

K.K. MITAL, HEAD OF PORTFOLIO MANAGEMENT SERVICES, GLOBE CAPITAL, NEW DELHI

"Their guidance is muted and the market may not be happy. But one has to accept the reality that some short-term pressures are there. There have been worries that clients are asking for moderation in rates, and this may put a little pressure on the outlook. But I think the latter half of next fiscal year should be OK. By that time there would be clear picture on Europe.

"Infosys shares have gone up recently, so there would be some amount of profit-taking, but we don't expect the stock to slip sharply."

R.K. GUPTA, MANAGING DIRECTOR, TAURUS MUTUAL FUND, NEW DELHI

"Despite of heavy depreciation in the rupee, if in dollar terms there revenue has gone up, then it's a positive thing for Infosys in particular and IT sector in general."

ROHIT ANAND, ANALYST, PINC RESEARCH, MUMBAI

"The results for this quarter are better than expected but there is slight disappointment over the fourth-quarter guidance. The important number to watch in the future will be the FY13 growth outlook and dollar revenue. Even if market growth is at about 10 to 12 per cent and the rupee is at 52, it will be good for the company. We do not expect the stock to plummet today."

AMBAREESH BALIGA, CHIEF OPERATING OFFICER, WAY2WEALTH, MUMBAI

"The performance is better than expected. You could see a bump-up in the stock but the question is whether it will sustain or not because of the outperformance that is already built in."

MICHAEL HUANG, MANAGER, YUANTA INDIA FUND, YUANTA SECURITIES INVEST MENT TRUST, TAIPEI

"The outlook of Infosys this year will depend largely on the U.S. and European markets, which contribute more than half of its revenues combined. Its prospect might not be as good as it has been over the last few years. But in longer term, this is a company that has a solid track record of its management and financial quality."