Infosys on Thursday posted a higher- than-expected
33.25 per cent growth in net profit to Rs 2,372 crore for Q3, FY12, but a downward revision of its full-year revenue outlook due to the
euro zone debt crisis overshadowed the results, with company stock
tanking by over 7 per cent.
"Infosys results are better than expected due to rupee factor, yet the weak guidance did not go well with investors," CNI Research CMD Kishore P Ostwal said.
The company had posted a net profit of Rs 1,780 crore for the December quarter of the previous fiscal (2010-11), Infosys said in a filing to the BSE.
Consolidated revenue of the country's second-largest software exporter rose by 30.8 per cent to Rs 9,298 crore during the October-December, 2011 period, from Rs 7,106 crore in the year-ago period.
"Infosys results show an underlying strength in the offshore paradigm, regardless of the naysayers. Profitability growth of 33 per cent is obviously driven by more than just a 8 per cent currency drop. The headwinds of the severe EU issues are undoubtedly there," Partha Iyengar, Vice President, Distinguished Analyst and Regional Research Director at IT research firm Gartner said.
"The global economy, driven by slower growth in developed markets, coupled with the European crisis, could impact the growth of the IT industry,"
Infosys CEO and Managing Director S D Shibulal said.
Bangalore-based Infosys forecast dollar revenue growth of 16.4 per cent for the fiscal year to March 31, down from 17.1 per cent to 19.1 per cent projected in October.
"Now, the environment is very uncertain. There is an euro zone crisis, plus the client confidence is down. Budgets are getting closed and early indications are it (budget) will be flat, with marginally down," Shibulal said.
"The spending is going to be choppy because it is going to depend on the clients' confidence. So in that situation, we need to remain cautious and that is the reason we have given flat guidance for Q4," he added.
For the ongoing quarter ending March 31, 2012, Infosys expects revenues to be in the range of Rs 9,391 crore to Rs 9,412 crore, with year-on-year (Y-o-Y) growth of 29.5 per cent to 29.8 per cent.
For the year ending March 31, 2012, the company expects revenues to be in the range of Rs 34,273 crore to Rs 34,294 crore, translating into Y-o-Y growth of 24.6 per cent to 24.7 per cent.
In the previous quarter ended September 30, the company had projected revenues to be in the range of Rs 8,826 crore to Rs 9,012 crore for the quarter ending December 31 and for the fiscal ending March 31, 2012, it had estimated revenues of Rs 33,501 crore to Rs 34,088 crore.
Reacting to the news, Infosys share plunged by nearly 8 per cent to an intra-day low of Rs 2,610 on the BSE.
On a standalone basis, the company posted a net profit of Rs 2,235 crore for the October-December quarter of 2011, up 36.19 per cent from Rs 1,641 crore in the same period last year.
Revenues rose to Rs 8,696 crore during the period under review, a growth of 33.08 per cent y-o-y from Rs 1,641 crore.
"Notwithstanding short-term challenges, we are focused on long-term growth opportunities by investing in platforms and solutions which will accelerate innovation, enhance returns for our clients and deliver higher business value," he added.
"Infosys 3Q, FY2012, results were lower than our expectations on the dollar revenue front, with dollar revenue growth at 3.4 per cent q-o-q to USD 1,806 million. The major disappointment came from the lowering of FY2012 USD guidance below our/consensus estimates to 16.4 per cent from earlier 17-19 per cent y-o-y," Angel Broking IT Research Analyst Ankita Somani said.
"In addition, the company gave a tepid revenue guidance for 4Q, FY2012," she said.
The company said as of December 31, 2011, its cash and cash-equivalents, including investments in available-for-sale financial assets and certificates of deposits, stood at Rs 19,752 crore.
"The global currency market continues to be volatile, with the Indian rupee depreciating by 11 per cent during the quarter," Infosys Member of the Board and Chief Financial Officer V Balakrishnan said.
Segment-wise, North America contributed 63.7 per cent in terms of revenue, Europe 22.6 per cent, India 2.1 per cent and the rest-of-the-world 11.6 per cent.
"Managing extreme currency volatility in an uncertain economic environment is going to be a challenge for the industry. We believe our focus on high-quality growth combined with our flexible financial model will position us better during these challenging times," Balakrishnan added.
The company had 1,45,088 employees as of December 31, 2011. It added 49 clients during the quarter.
"Guidance has been brought down to 16.4 per cent, that is in sharp contrast to what the top-end guidance of 19.4 per cent, this simply reflects that the underlined business operations which is Infosys is pertaining in the current context is slightly weak," Ashika Stock Brokers Research Head Paras Bothra said.
While Infosys' peer Wipro is coming out with its Q3 results on January 20, HCL will announce its results on January 17.
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