While announcing that it barely managed to meet sales forecast for the October-December quarter, the Bangalore-based firm blamed global economic uncertainty for the dim prognosis. Spending by clients on software services this year is expected to be about the same as last year, but decision-making is proceeding in slow motion, Infosys said.
"It's actually velocity of decision-making. Because we have visibility for deals, but when they will get closed becomes more difficult to predict," said Chief Executive Officer SD Shibulal.
Infosys shares careened lower by 8.4%, its biggest percentage drop since April 15. On the way to its lowest level in about a year, it broke the 50-, 100- and 200-day moving averages. Shares of the top five IT services companies, including TCS, HCL Technologies and Wipro, lost more than 25,000 crore in value on Thursday.
On the other hand, Infosys was given a leg up by the rupee, which weakened 11% during the third quarter and helped Infosys post a profit margin of 31.1%, its best in over two years. In rupee terms, Infosys reported revenues of 9,298 crore as net profit rose 33% to 2,372 crore.
India's second-largest software exporter revised its revenue growth forecast for 2011-12 to $7.02-7.03 billion, an increase of 16.4% from a year ago. Following a revision in October, Infosys has lowered its revenue target by up to 3.6 percentage points.
"(The) big guidedown in just a quarter invariably casts a doubt on Infosys' guidance policy. Earlier, Infosys' guidance was the industry standard and the flip-flop seen from Infosys in recent times does not augur well for its PE multiples in the medium term," said Nimish Joshi from brokerage CLSA.
But CFO V Balakrishnan defended the company saying, "In an environment like this, giving a guidance itself is a very bold thing."
Infosys just about managed to meet the lower end of its forecast for the third quarter with revenues of $1,806 million.
TCS and HCL Technologies will announce earnings on January 17 and Wipro on January 20.
