The big news is that Indian IT/BP bellwether Infosys actually missed its Q4 revenue target having already downgraded revenue expectations in January (see Infosys lowers guidance). As CFO V. Balakrishnan, put it “We had a very difficult quarter with revenues declining sequentially.” As the first of the Indian majors to report, Infosys’ results are a key marker for the performance of the wider market. Investors reacted by knocking 9% off Infosys’ shares. Rivals TCS and Wipro were also down. This points to tough times ahead.
In the quarter ended 31 March, revenue was down 1.9% qoq to $1.77bn. Infosys had expected revenue of between $1.806bn and $1.81bn – so a miss of as much as 2.2%. The net margin however rose 1 point to 26%. On a yoy basis, revenue was still up 10.5%. Nonetheless, this is a dramatic slowdown, because last year’s Q4 showed Infosys achieving 24% growth yoy, and helped it point to near 20% growth for the year (see Infosys looks for near-20% growth this year). It didn’t achieve that.
In the end, full year revenue was up 15.8% to just shy of the $7bn mark. The operating margin was more or less flat at 29%, and the net margin remained stable at c25% - this was helped by a weak Rupee, but clearly management is also holding the right levers to keep costs under control. Unsurprisingly, expectations this year are far more ‘subdued’, for growth of between 8% and 10%. That said there are plenty of Infosys’ European/US-based peers that would be more than happy with that kind of revenue forecast.
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