Infosys Ltd. forecast sales that lagged estimates, underscoring how clients are tightening IT budgets to weather an economic slowdown.
(Bloomberg) — Infosys Ltd. forecast sales that lagged estimates, underscoring how clients are tightening IT budgets to weather an economic slowdown.
India’s second-biggest software services firm expects to post revenue growth of between 4% and 7% this fiscal year ending March 2024. That compares with an average analyst estimate of 10.6%. The company’s US-listed shares fell 8% in early New York trading.
“During the quarter, we saw unplanned project rampdowns in some of our clients, and delays in decision making, which resulted in lower volumes,” Chief Executive Officer Salil Parekh said at a post-earnings press conference. “While we saw some signs of stabilization in March, the environment remains uncertain.”
Demand for Indian software services boomed during Covid-19 as enterprises turned to technology to sustain their businesses. But a reopening of economies and consequent return of workers to offices have seen demand slide from its peak. Russia’s war on Ukraine and fears of a recession have also spurred caution among sectors from banking to retail.
What Bloomberg Intelligence Says
“Software companies have already seen a reduction in demand from enterprise clients and Infosys may also see a similar pullback. However, we do expect the company to grow faster than most of its peers given its large digital footprint.”
– Anurag Rana, senior analyst
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Infosys and bigger rival Tata Consultancy Services Ltd. lead India’s $245 billion software services industry. TCS’ quarterly profit Wednesday missed analysts’ estimates with the outsourcer saying some clients were deferring discretionary projects.
For the quarter ending March, Bengaluru-headquartered Infosys posted a net profit of 61.3 billion rupees ($749 million), a rise of 7.7% over the previous year, it said in a stock exchange filing Thursday. Analysts expected a profit of 66.13 billion rupees. Sales rose 16% to 374.4 billion rupees.
Infosys’ large deal total contract value stood at $2.1 billion in the three months to March.
(Updates with US share trading in second paragraph)
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