Infosys Q3 profit lags estimates
Bangalore, January 13, 2011
Quarterly profit at India's Infosys Technologies lagged analysts' estimates and the company said the sluggish economic recovery in developed markets could hit the sector's growth, sending its shares to their lowest in more than three weeks.
India's No.2 software services exporter, which counts Goldman Sachs and BT among its clients, expects its dollar revenue to rise 25.7 to 26.1 percent in the year ending March, up from a 24 to 25 percent forecast in October.
Most analysts had expected Infosys to raise its dollar revenue growth outlook to 27 to 28 percent.
Infosys, which kicked off results for the country's showpiece $60 billion IT services sector, said net profit for the fiscal third-quarter ended December rose to 17.8 billion rupees ($396.4 million) from 15.6 billion a year ago. This compares with a Reuters poll of 18.2 billion rupees.
"Normally the December quarter is not that great for IT companies, but still expectations were good because of talk about recovery in the US," said Neeraj Dewan, a director at Qauntum Securities in New Delhi.
"People won't be surprised if Tata Consultancy Services and Wipro also report below expectations, because Infosys has set that kind of a direction," he said.
Analysts said the possibility of a sharper appreciation in the rupee, rising wages and intensifying competition from global firms such as IBM , Accenture and Hewlett-Packard were also key risks for export-driven Indian outsourcers.
Infosys, sector leader Tata Consultancy Services, and No. 3 Wipro, have been on a hiring spree and have given pay hikes of up to 20 percent to fight poaching by global rivals.
"The weaker economic recovery in developed markets coupled with high unemployment and risk of sovereign default could impact industry growth," Infosys chief executive S
Gopalakrishnan said in a statement.
Shares in Infosys, valued at about $42 billion, fell as much as 4.2 percent after the results in a broader Mumbai market down 0.5 percent. Shares in rival Tata Consultancy were up 0.6 percent. - Reuters