Still in the woods: Infosys Q4 net meets estimates but outlook bleak

Infosys reported a net profit of Rs 2,394 crore for January-March which was in line with expectations and a lower than estimated revenue of Rs 10,454 crore, proving that the company is yet to come out of the woods.

FP Staff December 20, 2014 18:53:10 IST
Still in the woods: Infosys Q4 net meets estimates but outlook bleak

Infosys reported a net profit of Rs 2,394 crore for January-March which was in line with expectations and a lower than estimated revenue of Rs 10,454 crore, proving that the company is yet to come out of the woods.

Still in the woods Infosys Q4 net meets estimates but outlook bleak

The company's 6-10 percent revenue growth guidance for the new fiscal year also fell short of the expectation. AFP

The company's 6-10 percent revenue growth guidance for the new fiscal year also fell short of the expectation.

It did not give an earnings per share (EPS) guidance.

According to a Reuters poll of 18 analysts, the company was expected to report a net profit of Rs 2,300 crore, flat on year. It projected a 21 percent increase in revenue to Rs 10,700 crore. Analysts had expected the company to publish a revenue growth guidance of about 12 percent.

According to the company's press release, revenuegrew 0.3 percent on quarter and 18.1 percent on year.

The net profit growth was 1.1 percent on quarter and 3.4 percent on year.Its EBIT margins stood at 23.55 percent compared with a CNBC-TV18 poll estimate of 25.06 percent.

Warning about global economic uncertainties, SD Shibulal, CEO andmanaging director, exuded confidence that the company is progressing well on its strategic direction.

"We are making all the investments necessary to differentiate ourselves in the market place while positioning ourselves as a partner of choice for our clients," he was quoted as saying in the press release.

Echoing the concerns raised by the CEO,Chief FinancialOfficer Rajiv Bansal said, "The global currency market continues to bevolatile reflecting the uncertain economic environment. Our hedging strategy helps us to minimize the volatilityimpact."

Reacting to the disappointing results, Infosys shares on the BSE opened down about 10 percent, in turn pulling down the benchmark Sensex down about 320 points.

At 9:15 am, the stock was down 16 percent at Rs 2,442.

Kotak Institutional Equities told CNBC-TV18 termed the earnings "very, very disappointing". BofA ML said it expects brokerages to downgrade the stock.

On a consolidated basis Infosys added 56 clients during the quarter.

It added 1,059 staff during the quarter to increase the total staff strength to 1,56,688 as on March 31.

"The company has decided to set aside up toUS$100 million to investin products, platforms and solutions ideas in line with Infosys 3.0 strategy," the release said.

Infosys's other income during the quarter was Rs 674 crore as against Rs 503 crore a quarter ago.

Infosys poor show: what management has to say

The January-March quarter truned out be softer than expected and pricing and margins are expected to remain under pressure in the short term due to volatile environment, said Infosys CEO SD Shibulal.

"In Q3 we had volume increase and a pricing increase. Q4 turned out to be softer than extpecation," he said.

He said the company's deal pipeline is robust clients are struggling to take decisions.

In the Q4, pricing declined fell 0.7 percent and volume grew just 1.8 percent.

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