NEW DELHI Indian IT services giant Infosys Ltd warned it won't make its previous revenue target for this fiscal year, cutting its outlook after first-quarter earnings came in below estimates and Britain's vote to exit the European Union left the company with little visibility on future business prospects.
Shares in Infosys, India's second-largest IT firm, slumped as much as 10 percent in Mumbai on Friday on the potential Brexit impact warning.
Infosys said it now expects revenue to grow between 10.5 percent and 12 percent in constant currency terms in the year ending March 31, 2017. It previously estimated growth of between 11.5 percent and 13.5 percent.
"As we look ahead to the future clearly (Brexit) is something that many banks are worried about and so forth," said Chief Executive Officer Vishal Sikka. "In the near term we don't know how this will play out and so forth. So, given the visibility we lowered our guidance."
Banking and financial services clients contribute a third of Infosys' revenue. The company gets about 23 percent of its revenues from clients based in Europe, the lowest among peers including top Indian IT firm Tata Consultancy Services.
Sikka said Britain's June 23 vote to leave the European Union hadn't affected the company so far.
Infosys' consolidated net profit for the April-June quarter rose 13 percent to 34.36 billion Indian rupees ($513 million) from 30.3 billion rupees a year earlier.
Analysts on average had expected a net profit of 34.42 billion rupees, according to data compiled by Thomson Reuters.
"We had unanticipated headwinds in discretionary spending in consulting services," said Sikka, "as well as slower project ramp-ups in large deals that we had won in earlier quarters, resulting in a lower-than-expected growth in the first quarter."
Shares of Infosys, a bellwether for India's $150 billion IT services industry, were trading 9.3 percent lower at 0605 GMT.
Under CEO Sikka, Infosys has made bets on automation and other high-margin services such as artificial intelligence and digital technology to regain ground lost to rivals and meet its goal of achieving revenue of $20 billion by fiscal 2020 - more than double revenue of about $9.3 billion in the fiscal year ended last March.
The company said it added three clients to its $100 million-plus category in April-June, taking the total to 17. Total clients grew 14 percent to 1,126 during the quarter.
($1 = 66.9300 Indian rupees)
(Additional reporting by Tripti Kalro in BANGALORE, Abhirup Roy in MUMBAI; Reporting by Aditi Shah; Editing by Kenneth Maxwell)
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Updated Date: Jul 15, 2016 12:06:10 IST