IT stocks turn weak as Cognizant gives slower rev guidance

Feb 06 2014, 21:23 IST
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IT stocks fell after Cognizant forecast 2014 revenue guidance below market expectations. Reuters IT stocks fell after Cognizant forecast 2014 revenue guidance below market expectations. Reuters
SummaryShares of TCS lost 1.18 per cent and Infosys fell by 0.51 per cent on the BSE.

IT stocks today fell by over one per cent after US-based Cognizant forecast at least 16.5 per cent revenue growth in 2014, which was below market expectations.

Shares of TCS lost 1.18 per cent and Infosys fell by 0.51 per cent on the BSE.

The BSE IT index ended the day at 9,226.67, down 0.17 per cent.

Analysts said that IT stocks fell after Cognizant forecast 2014 revenue guidance below market expectations, raising concerns about the sector's growth prospects.

Cognizant yesterday reported a 16.3 per cent rise in net profit for the fourth quarter ended December 31 but forecast at least 16.5 per cent revenue growth in 2014, which is slower than this year's rate.

The New Jersey-headquartered firm posted a net profit of USD 324.3 million in October-December 2013 from USD 278.8 million in the year-ago period, helped by growth in financial services and healthcare and improved business from North America and Rest of Europe (excluding the UK).

Revenues for the reported quarter rose 20.4 per cent to USD 2.36 billion in October-December 2013 from USD 1.95 billion in the same quarter of 2012. It follows January-December fiscal.

For the entire 2013 fiscal, the Nasdaq-listed firm's revenues rose by 21 per cent to USD 8.843 billion, while net profit was up by 17.1 per cent to USD 1.23 billion.

Providing revenue guidance for 2014, the company said it expects revenues to grow by at least 16.5 per cent compared to 2013, which is lower than 20.4 per cent growth in last fiscal.

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