Infosys lowers guidance for fiscal 2013

Bangalore, April 13 (IANS) India's second largest IT bellwether Infosys Ltd Friday projected a lower guidance of 15 percent growth year-on-year (YoY) for the new fiscal 2012-13 (FY 2013) on signs of slow recovery in global markets.

Sequential decline in net profit and revenue during fourth quarter (January-March) of fiscal 2011-12 also made the global software major peg its revenue for fiscal 2013 at Rs.38,784 crore (Rs.388 billion), a modest 15 percent increase YoY as against 23 percent YoY growth at Rs.33,734 crore (Rs.337 billion) it posted in fiscal 2012.

"The year ahead looks challenging for the IT services industry, with slow recovery in global markets," Infosys chief executive S.D. Shibulal said in a statement after the company declared financial results for the fourth quarter (Q4) under review.

For the first quarter (April-June) of the new fiscal, the company, however, projected 21 percent YoY growth to Rs.9,056 crore (Rs.90.56 billion) in rupee terms.

Under the International Financial Reporting Standards (IFRS), revenue for the first quarter (Q1) is expected to be $1.8 billion, up 6.6 percent YoY and $7.6 billion for the whole fiscal (FY 2013), projecting an increase of nine percent YoY.

In a regulatory filing earlier, the company reported Rs.2,316 crore (Rs.23.16 billion) net profit for the fourth quarter (Q4), registering 27.4 percent YoY growth, but 2.4 percent lower sequentially from Rs.2,372 crore (Rs.23.72 billion) in the previous/third quarter (October-December) in rupee terms.

Similarly, consolidated revenue for the quarter under review (Q4) grew 22.1 percent YoY to Rs.8,852 crore (Rs.88.52 billion) but declined 4.8 percent sequentially from Rs.9,298 crore (Rs.92.98 billion) in third quarter.

Under IFRS, net income grew 15.2 percent YoY to $463 million and consolidated revenue to $1.77 billion, up 10.5 percent YoY for the fourth/last quarter of FY 2012.

"We had a very difficult quarter with revenue declining sequentially. The global currency market volatility continues to be a challenge for the industry," the company's CFO V. Balakrishnan said in the statement.

Though earnings per share (EPS) at Rs.40.54 for the fourth quarter were 27 percent up YoY, it was 2.3 percent lower quarter-on-quarter or sequentially.

EPS for the entire fiscal under review (FY 2012) at Rs.145.55 (basic) and Rs.145.54 (diluted) was 21.9 percent higher YoY.

"Our focus on high quality growth coupled with strong financial discipline helped us to deliver on EPS guidance in US dollar terms," Balakrishnan noted.

Lower projection of EPS for the new fiscal (FY 2013) at Rs.160, an increase of 10 percent YoY, however, did not go well with the street (market) expectations.

As a result, shares of the blue chip company was hammered on the Bombay Stock Exchange (BSE) by over 10 percent when it touched a low of Rs.2,451 in early trading as against Thursday's closing rate of Rs.2,750 per share of Rs.5 par value and opening rate of Rs.2,540 per share.

"We are executing on our 3.0 strategy to deliver high quality growth in the medium to long-term. We are also making investments and have put in place a structure to deliver on this strategy," Shibulal observed.

The company, however, rewarded its institutional and retail investors, with a whopping 440 percent final dividend of Rs.22 per share and a 200 percent special dividend of Rs.10 per share to mark the completion of 10 years by its BPO (business process outsourcing) subsidiary or back office operations.

As a debt-free company, cash reserves, including investments and deposits, shot up to Rs.20,968 crore ($4.12 billion) from Rs.16,819 crore ($3.31 billion) a year ago.

The company and its subsidiaries the world over added 52 clients during the quarter (Q4), taking the total number for fiscal 2012 to 694 as against 665 quarter ago and 620 year ago.

On the hiring front, though, the company and its subsidiaries added 10,676 people, during the quarter (Q4), net addition was 4,906 as 5,770 quit in three months, taking the total number of employees for the fiscal under review (FY 2012) to 149,994 from 145,088 a quarter ago and 130,820 a year ago.