India’s second-largest IT company Infosys on Friday reported a 6.1 per cent rise in its second quarter net profit but cut its annual sales growth forecast for the second time in three months on an “uncertain business outlook”. Consolidated net profit was Rs 3,606 crore in July- September quarter, up from Rs 3,398 crore a year earlier, the company said in a statement.
It, however, projected a 7.5-8.5 per cent rise in sales in US dollar terms in the year ending March 31, down from 10 per cent growth it had forecast in July. Its earlier revenue growth target of 10 per cent had been lowered already from up to 11.5 per cent projected in April this year. In constant currency, revenue is now expected to grow 8-9 per cent this fiscal for Infosys. The target is much below the growth estimates for IT exports that has been pegged at 10-12 per cent by industry body Nasscom.
Reacting to the cut in guidance, Infosys shares fell 2.38 per cent to Rs 1,027.00 apiece on the BSE. The impending US presidential elections and implications of Britain’s exit from the European Union have slowed growth in the banking and financial services sectors, and companies are tightening their contracting budgets, adopting a more cautious spending approach. In August, Infosys lost a key contract with Royal Bank of Scotland Group Plc. “While we continue to navigate an uncertain external environment, we remain focused on executing our strategy and increasing momentum of our software plus services model.
Considering our performance in the first half of the year and the near-term uncertain business outlook, we are revising our revenue guidance,” Infosys CEO Vishal Sikka said. He added that in the long term, it’s increasingly clear that the IT industry’s future lies in evolving from a cost-based, people-only model, to one in which people are amplified by software and artificial intelligence (AI).