Analysts cut Infosys growth outlook to 3.8%
Infosys new Chief Financial Officer Rajiv Bansal spoke to analysts recently, raising concerns about the feasibility of the 5 per cent growth guidance earlier given by the company.
Barclays Capital analysts Bhuvnesh Singh and Vaibhav Dhasmana in the report titled ‘Infosys Ltd: Near term challenges persist’ released on Friday wrote that, “Delayed decision making has resulted in a few project delays and postponements and earlier than usual furloughs at clients is impeding decision making and volume growth in the current quarter.”
The report added that challenges remain in BFSI vertical with an increased uncertainty over the recent weeks.
Analysts at Barclays expect the IT giant to grow by 3.8 per cent year-on-year.
Infosys Chief Executive S D Shibulal was attributed as saying by UBS in an investor meet that the company’s dollar revenue growth outlook of 5 percent for the year ending March 2013 could be under threat.
Customer deferrals, ramp-downs in a few large projects, delays in large deal closures and longer-than-expected client shutdowns due to Hurricane Sandy, especially in the manufacturing sector, may cause threat to outlook, says a UBS note.
The UBS report also said, "Our conversation with Infosys reinforces our concerns on near-term pressures on guidance. This is likely to impact stock price over the near term, but we see limited downside from current levels given the low expectations and cheaper valuations.”
Nomura says possibility of an organic revenue growth outlook cut in the third quarter of current fiscal year remains high. It prefers companies with current business momentum like HCL Technologies, Cognizant Technology Solutions and Tata Consultancy Services.
An Infosys spokeswoman did not have an immediate comment.
The NSE's IT index has fallen 2.73 percent in last two days after a Cognizant Technology Solutions Corp filing with the SEC raised concerns about its 2013 revenue outlook.