Infosys cuts revenue outlook

Infosys Ltd. cut the upper end of its full-year revenue growth forecast to 8.8% in constant currency terms as Indian software exporters brace for a more protectionist visa regime in the U.S., the industry’s largest market.

India’s second-largest software services provider also reported net profit for the third-quarter ended December 31, 2016, rose 7% from a year earlier to ₹3,708 crore as Infosys shrugged off the impact of a major project cancellation that dented sales by about 1%. Revenue for the period climbed 8.6% to ₹17,273 crore, the Bengaluru-based company said in a statement on Friday.

The Royal Bank of Scotland, one of Infosys’s top 10 clients, had scrapped a project due to the impact of Britain’s vote to exit the European Union.

Additional headwinds

“Taking into account seasonal and other additional headwinds for the quarter, our Q3 revenue performance was broadly in line with our expectations,” said Vishal Sikka, CEO and MD, Infosys.

“Despite the RBS impact of 1% our BFSI grew well. We expect there would be a shift in spending in the BFSI segment. It will move from more regulatory and cost-oriented to more innovation, technology and growth oriented. I am confident and very optimistic about the BFSI segment and our prospects,” said Mr. Sikka.

In a seasonally weak quarter, Infosys’s profit grew 2.8% sequentially, while revenue declined by 0.2% from the preceding three-month period.

On Thursday, India’s largest IT-services exporter Tata Consultancy Services had announced a strong quarterly performance, beating market estimates with a 11% increase in net profit.

Infosys revised its full-year guidance for the third time. While it raised the lower end of the revenue growth projection to 8.4%, it cut the upper bound. At the end of the second quarter, Infosys had projected revenue in the 12 months ending March 2017 to expand at 8-9% in constant currency terms. IT industry body Nasscom had in November revised the industrywide growth forecast for the full year to 8-10%.

“The company delivered in-line to better numbers for Q3,” Morgan Stanley analysts wrote in a note to clients. “But it has tweaked guidance, indicating a muted growth outlook for Q4.”

At the end of December, the total number of employees was 1,99,763 people and the utilisation stood at 77.8%.

“During the quarter, we added 77 clients and also added 2 clients in the $75 million plus revenue category, ” Chief Operating Officer U. B. Pravin Rao said.

Infosys shares fell 2.49% to ₹975.15 at the close of trade on the BSE.