Corporate Dec 7, 2012
Infosys' dollar revenue growth outlook of 5 percent for the year ending March 2013 could be under threat, Infosys management have been attributed as saying by various analyst reports. This is likely to add to the overall pessimism around Infosys, which has been struggling to grow revenues in the last year.
Infosys had initially given a guidance of 8-10% for FY13 but revised this downwards to 5% after their first quarter results, as it struggled to generate demand in a volatile global environment.
Customer deferrals, ramp-downs in a few large projects, delays in large deal closures and longer-than-expected client shutdowns due to Hurricane Sandy, especially in the manufacturing sector, may cause threat to outlook, said a UBS note.
Even reports by brokerages Nomura and Barclays said there is a risk to the company's organic growth guidance based on recent conversations with Infosys CEO SD Shibulal and CFO Rajiv Bansal. Shutdown impacts in manufacturing, challenges in BFSI vertical and delays in decision-making are reasons cited by these brokerages for a possible miss on revenue guidance too.
UBS said it is surprised by potential outlook cut, but fears its own revenue forecast for company at 3.8 percent may be hurt as it had not factored impact of Hurricane Sandy.
"Our conversation with Infosys reinforces our concerns on near-term pressures on guidance. This is likely to impact stock price over the near term, but we see limited downside from current levels given the low expectations and cheaper valuations," said the UBS the note.
Nomura said the possibility of an organic revenue growth outlook cut in the third quarter of current fiscal year remains high. It prefers companies with current business momentum like HCL Technologies, Cognizant Technology Solutions and Tata Consultancy Services.
UBS, Nomura both retained "Neutral" rating on Infosys stock. Shares of Infosys fell 0.6 percent.
The NSE's IT index has fallen 2.73 percent in last two days after a Cognizant Technology Solutions Corp filing with the SEC raised concerns about its 2013 revenue outlook.
With inputs from Reuters
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