Infosys misses estimates, cuts guidance forecast

The IT major reported proft of Rs 3,436 crore and revenue of Rs Rs 16,782 crore

After showing impressive numbers for past few quarters, Infosys, India’s second largest IT services company seems to have lost the pace of growth in the quarter ended June 30, 2016.  

In the quarter ended June 2016, the Bengaluru-headquartered company, for the first time in the last four quarters, missed the revenue guidance for the year ahead as it saw customers reduce  discretionary spending on software projects. The company’s share price was down by over 8% in the early trade on the BSE at around Rs 1083.15.
 
The Bengaluru-based IT bellwether reported 13.4% growth in first quarter profits to Rs 3,436 crore and revenue jumped by 16.9% to Rs 16,782 crore.

 

It missed Bloomberg profit estimates of Rs 3,446 crore, as well as revenue estimates of Rs 17,034 crore.
 
"We had  unanticipated  headwinds  in  discretionary  spending  in  consulting  services  and  package implementations as well as slower project ramp-ups in large deals that we had won in earlier quarters, resulting in a lower than expected growth in Q1,” said Dr. Vishal Sikka, CEO in a statement.
 
Sikka maintained that the company's execution strategy were on track and expect strong growth in large deal wins.
 
Infosys reduced its annual forecast in the top end by 150 basis points to 12% and in the lower end by 100 basis points to 10.5%.

 
In April, the IT services firm firm forecast strong revenue growth of 11.5%-13.5%.
 
Infosys results pales in comparison with market leader Tata Consultancy Services Ltd, which on Thursday beat street estimates by delivering better than expected numbers.
 
TCS's profits grew 10.6% to Rs 6317 crore and revenues jumped 14.1% to Rs 29,304 crore for the quarter ending June. This was the second time when TCS surpassed Street estimate on profitability, after missing it for six quarters. Sequentially, profits were down marginally by 0.4%.
 
This is a very strong quarter from multiple dimensions. From a footprint perspective, we are happy to see growth across sectors and geographies and across key indicators. All verticals are doing well. Our deal pipeline and deal wins look good. Strong execution and accelerating customer adoption of Cloud, Big Data & Analytics have driven broad-based growth across key markets and industries,” said N Chandrasekaran, chief executive & managing director.