Infosys Q4 net up 3.4%, shares nosedive on lower FY14 guidance

IT giant Infosys today reported a 3.4 per cent rise in its consolidated net profit at Rs 2,394 crore for the fourth quarter last fiscal but its shares plunged by over 21 per cent, its worst fall in a decade, on weak revenue guidance for 2013-14 fiscal.
The revenues for the quarter ended March 31, 2013 were up 18.1 per cent at Rs 10,454 crore.
In its FY'14 outlook, the country's second largest software services firm said it expects revenues to grow 6-10 per cent for the current fiscal, much below IT industry body Nasscom's industry growth projection of of 12-14 per cent.

Reacting to the dismal revenue guidance, Infosys's shares dived 21.33 per cent, wiping off Rs 36,000 crore in its investor wealth.Pulled down by Infosys, Sensex lost 300points.
At a news conference here, Infosys CEO and Managing Director S D Shibulal defended the lower guidance, which he termed as a "safe range" arrived at based on "all the information that we have at this point in time".
He said revenue projection of Infosys and the industry as a whole cannot be compared. "Our revenue from consulting and systems integration is 32 per cent which is much higher than industry average", he said.

Considering its IT industry bellwether status, Infosys has been struggling to meet its guidance in last few quarters, experts said. Following Infosys lower-than-expected performance and guidance, the results of the other top IT firms will be closely watched. TCS will announce fourth quarter results on April 17, followed by HCL Technologies (April 17) and Wipro (April 19).

Infosys' dependence on discretionary spend by its clients continues to be 32-33 per cent, while it's 17-18 per cent for the industry, resulting in the company facing "more volatility," Shibulal said.
Infosys did not give guidance on Earnings Per Share (EPS) front due to volatile market conditions going into 2013-14.

Shibulal said the impact of compensation increase of six per cent for offshore employees and 3-4 per cent for on-site staff was not fully factored in the last year "which will come out in the next year (2013-14) which will be USD 140 million.