Goutam Das
India's third-largest IT services exporter Infosys took the lid off the
fourth quarter earnings calendar with a bunch of numbers that disappointed brokerages and investors on every front -- the topline, margins and full year guidance. The stock was punished in Friday's trade, slumping 21 per cent to close at Rs 2,295 on the BSE. The Sensex fell nearly 300 points, weighted down by the fall in Infosys shares.
Sequential dollar revenues inched up just 1.4 per cent to $1.93 billion, much below street expectations of 4 per cent growth. The Lodestone acquisition added $70 million to the quarter's revenues and when this is excluded, the company's revenues stand flat compared to the December quarter.
In rupee terms, the company's revenues for the quarter were flat sequentially at Rs 10,454 crore versus analyst expectations of Rs 10,730 crore. The numbers signal the company has yet to recover from a slowdown of its sales engine and lost momentum with clients. The company said the business climate was soft and its pricing was under pressure. Infosys was also
not able to ramp up deals as fast as it had anticipated.
The results are in sharp contrast to Infosys' third quarter numbers that held out hope of a recovery in the firm's fortunes. The company's sequential revenues jumped 6.3 per cent in the December quarter to $1.91 billion.
"The results are very disappointing. What the company is doing in the organic business is a questionmark," remarked Sanjeev Hota, analyst with brokerage house Sharekhan. "The company's margins are lowest ever at 23.6 per cent. I don't expect margins to improve next quarter as higher visa and amortization costs kick in," he added. Hota was expecting operating margins of 24.8 per cent.
The company's operating profits slipped - from Rs 2,462 crore compared to Rs 2,677 crore in the previous quarter not just because of pricing pressure but also due to integration costs of the Lodestone acquisition and possibly, lower margins from the Lodestone business, he said.
Profits, however, went up 1.1 per cent to 2,394 crore, versus expectations of Rs 2,297 crore. The profits were buoyed by a huge other income of Rs 674 crore, mostly because of forex gains.
The bigger disappointment for
analysts was its outlook for full year 2013/14 . Infosys guided to 6-10 per cent full year growth, much below Nasscom's guidance of 12-14 per cent. Dipen Shah, analyst with Kotak Securities, said the guidance reflected the company's lack of visibility. "Infosys has also discontinued giving EPS guidance for the year, which reflects pricing and margins uncertainty," he said.
Last year, Infosys stopped its old practice of giving out quarterly guidance.
For full year 2012/13, the company delivered 5.8 per cent growth to $7.39 billion. In April last year, Infosys had forecast revenues in the range of $7.55 billion and $7.69 billion, a growth of 8 to 10 per cent. The guidance was eventually scaled down to $7.45 billion in January this year but Infosys sill missed it.
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