Monday, April 16, 2012

Infosys hit by slew of downgrades post Q4 earnings

Infosys lost 0.3 per cent to Rs 2,394.50, extending losses from a 13 per cent plunge on Friday after a slew of analysts downgraded the stock following its lower-than-expected revenue growth outlook on Friday.

CLSA downgraded India's No.2 software services exporter to 'Underperform' from 'Outperform,' with a 12-month target price of Rs 2,630.

Meanwhile, Deutsche Bank cut the stock to 'Hold' from 'Buy', with a revised target price of Rs 2,400, while Macquarie also downgraded the stock to "Neutral", but with a target price of Rs 2,450.

"Mishaps on the HR front, a protracted re-organisation and continued operational slip-ups, all in the past 18 months has invariably raised the bogey of Infosys is losing its magical operational excellence," said CLSA in its report.

Deutsche Bank said Infosys' rivals Tata Consultancy Services and Wipro were "best positioned to deliver value" given clients in the sector are facing budget constraints on their spending.

At 10:05 AM, shares in Infosys were trading at Rs 2406.00, up 0.11 per cent on the Bombay Stock Exchange (BSE).

Analysts said that the biggest disappointment was Infosys' revenue guidance for the next year, which is taken as a benchmark for the IT industry as a whole.

Infosys Ltd, India's No.2 software services exporter, posted a 27.4 per cent rise in quarterly profit on Friday, but forecast lower-than-expected revenue growth for the current fiscal year due to an uncertain global economy and currency volatility.

Bangalore-based Infosys said on Friday consolidated net profit for the fiscal fourth quarter ended March 31 rose to Rs 2316 crore ($449 million) from Rs 1818 crore a year earlier. However, Infosys missed the Q4 dollar guidance.

The company expects its dollar revenues to grow 8-10 per cent for the year ending March 2013 to $7.55 billion to $7.69 billion.

"The year ahead looks challenging for the IT (information technology) services industry, with slow recovery in the global markets," said S.D. Shibulal, chief executive officer of Infosys.

"We are executing our Infosys 3.0 strategy which is meant to deliver high quality growth in the medium to long-term. We are making investments and have put in place a structure to deliver on this strategy," he added.

Shibulal also said that Infosys for the first time did not meet the lower end of the guidance in the January-March quarter. He also expects client budgets to be flat to marginally down. 



Saket Kumar
pgdm2nd

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