Is another guidance cut on cards for Infosys?

Infosys, the bellwether company of the Indian IT industry, could well be bracing up for another guidance cut ifthe reports of some of the prominent brokerage firms are any indication.

According to a report by HSBC, Infosys’s dollar top line growth is likely to be impacted by 1.5 percent for the full year ended March 2013. “At the current currency rates (GBP/USD EUR/USD, AUD/USD) the USD top-line growth is likely to be impacted by near 1.5 percent for the full year FY13 " said the research firm in its report on 8 June, thereby leading to a possibility of a revision in the company’s full year 2013 guidance. (The company provided top line growth guidance of 8-10 percentin April).

BNP Paribas is already one step ahead as they have cut the company’s topline guidance by 0.7 percent. They are projecting a 6.5 percent dollar revenue growth for the year ended March 2013.

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[caption id=“attachment_349037” align=“alignleft” width=“380” caption=“According to a report by HSBC, Infosys’s dollar top line growth is likely to be impacted by 1.5 percent for the full year ended March 2013. Reuters”]  [/caption]

Even Prabhudas Lilladher cites in their report that the management could calibrate guidance (0-1 percent downward) to adjust the cross-currency movement. The management, however, did notgive any hint to that effect, the report said.

The rupee’s depreciation against the dollar does provide a windfall to the company, though, according to HSBC, which has a neutral rating for the stock.

The company can also share the currency benefit with its employees, the reports said. While Prabhudas Lilladher sees that in the form of awage hike, HSBC expects the staff to get a bonus.

BNP Paribas maintains its hold rating on the company and recommends buying the stockwith a target price of Rs 2,940.