Shares fall over 10%, cuts $3 bn from market cap; sees fiscal 2012/13 dollar revenue growth of 8-10%
India's software major Infosys Ltd disappointed investors on Friday with a lower-than-expected revenue growth outlook due to an uncertain global economy and currency volatility, sending its shares down to their lowest level in more than six months.
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The forecast from India's No.2 software services exporter sparked worries about the prospects for the country's $100 billion outsourcing sector, which faces slowing demand from its western clients and intense competition from global rivals.
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Shares in Infosys, once seen as a sector trend-setter, were trading 8.9 percent down at 2,505 rupees at 0642 GMT, after having fallen as much as 10.9 percent. The fall wiped off $3 billion from the company's market value. The main market was up 0.3 percent.
The company said it expects its dollar revenues to grow 8-10 percent for the year ending March 2013 to $7.55 billion-$7.69 billion, lower than expectations of 10 percent to 15 percent forecast by most analysts.
Clearly, there is no immediate recovery in sight for the industry with expectations that the environment will continue to remain challenging, said Dhiraj Sachdev, senior fund manager at HSBC Asset Management in Mumbai.
However, there is one thing we need to keep in mind. This is the first quarter when the budgets are just prepared and in the planning stage so we will get more clarity on how the year will go when we are a few months into it.
Reflecting concerns about the Indian outsourcing sector's growth, the information technology market index fell 6 percent, while sector leader Tata Consultancy Services was down 4 percent and Wipro dropped 3 percent.
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Bangalore-based Infosys said consolidated net profit for the fiscal fourth quarter ended March 31 rose 27.4 percent to 23.16 billion rupees ($449 million) from 18.18 billion rupees a year earlier.
Analysts had forecast a net profit of 23.18 billion rupees for the company, whose customers include Procter & Gamble Co and Volkswagen AG, according