Infosys PAT rises 11% but misses estimates; sales outlook halved

economictimes.indiatimes.com:

Infosys posted a nearly 11% increase in first-quarter net profit, but missed analyst estimates and slashed its revenue growth outlook for the fiscal year, blaming spending cuts and delays in decision-making by clients, especially in the key financial services domain. India’s second-largest software exporter projected its revenue in fiscal 2024 to grow 1.0-3.5% in constant currency, or excluding exchange rate fluctuations, compared with the previous estimate of 4.0-7.0%, underlining the global macro challenges for the country’s storied sector which is seeing tepid demand for outsourcing services.

The latest growth projection is the lowest in over a decade, and the cut was termed as “drastic” and a “shocker” by brokerage Jefferies. The Bengaluru-based company that shed employees for the second straight quarter said it would hire only based on demand.

“In the short term, we see some clients stopping or slowing down transformation programmes and discretionary work,” managing director Salil Parekh told reporters Thursday. Clients are also delaying the start of big projects, which is impacting revenues, he said.Also read | Headcount at big 4 Indian IT companies dips in Q1Infosys may lag against rivals TCS, HCL in FY24 “And, with that, we see a lot of that revenue from that sort of large and mega deals towards the later part of the financial year.” Net profit for the April-June period rose to Rs 5,945 crore from Rs 5,360 crore a year earlier.

Revenue increased 10% to Rs 37,933 crore, supported by growth in Europe and the domestic market. The Street expectations were for the net profit to grow 16.5% and revenue to expand 9.7%.