Infosys Ltd. narrowed its sales forecast for the fiscal year, a sign that corporations are continuing to curtail spending on software and information technology projects.
(Bloomberg) — Infosys Ltd. narrowed its sales forecast for the fiscal year, a sign that corporations are continuing to curtail spending on software and information technology projects.
Revenue will grow between 1% to 2.5% in the year through March 2024, Infosys said Thursday in a statement. In July, it had already trimmed its growth forecast to a range of 1% to 3.5%. Analysts on average expect 5% growth.
Net income rose 3.2% to 62.1 billion rupees ($746 million) in the fiscal second quarter through September, Infosys said Thursday in a statement. Analysts estimated 62.7 billion rupees on average. Sales rose 6.7% to 389.94 billion rupees. Infosys maintained its full-year sales growth forecast.
India’s second-largest software services exporter and global IT rivals such as Accenture Plc are struggling to maintain growth as corporations curtail expenditures to cope with higher interest rates and inflation. Infosys is trying to move to higher-margin technologies as India’s more than $245 billion software services sector struggles with a hazy growth outlook.
On Wednesday, larger rival TCS reported quarterly profit that narrowly missed estimates, saying customers are conserving cash to prepare for a difficult period ahead. It said companies are postponing projects in the US and beyond, citing an uncertain economic outlook.
Still, Bengaluru-based Infosys and rivals remain optimistic about their long-term prospects as companies adopt new technologies such as generative AI.
What Bloomberg Intelligence Says
Infosys’ near-term sales growth will likely be challenged as enterprise IT spending weakens, with next year probably flat to a low-single-digit gain in constant currency, well below its medium-term potential of high-single- to low-double-digit increases. Otherwise, Infosys is well positioned in IT services, showing a strong digital footprint with more than 60% of total sales coming from emerging technologies. We expect the revenue slowdown to be offset by lower head count this year from previous years, which could help maintain flat operating margin for the full year.
– Anurag Rana and Lucas Ramadan, analysts
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