Arab Today, arab today shares in india\s infosys dive after weak earnings
Last Updated : GMT 21:26:48
Arab Today, arab today
Arab Today, arab today

Shares in India\'s Infosys dive after weak earnings

Arab Today, arab today

Arab Today, arab today Shares in India\'s Infosys dive after weak earnings

Bangalore - AFP

Shares in Indian outsourcing giant Infosys dived Friday after it issued a disappointing growth forecast and warned of global challenges, sparking worries about other firms in the flagship sector. Infosys, whose earnings have traditionally been seen as a bellwether for the sector, said net profit rose 3.4 percent to 23.94 billion rupees ($439 million) for the three months to March, slightly ahead of forecasts. But weak fourth-quarter revenues and sales projections for the coming 12 months came in below expectations, sending the firm\'s shares tumbling by as much as 20 percent. \"The lower-than-expected results and guidance reflects the uncertain macro environment and the pricing pressures the company is experiencing,\" said Dipen Shah, head of private client research at Mumbai\'s Kotak Securities Many of India\'s IT outsourcing firms have been going through a rough stretch and they say the outlook for the industry remains difficult due to uncertainty in key US and European markets. Infosys\' fourth-quarter revenues rose 18 percent to 104.54 billion rupees, undershooting forecasts of 107 billion rupees while its projections for revenue growth in the next 12 months were far below market estimates. The outsourcer, the second-largest by revenues whose results kicked off India\'s quarterly earnings season, said its dollar-based revenue in the financial year to March 2013 would grow by six-to-10 percent, far weaker than analysts\' hopes of up to 12 percent. The company reported full-year revenue of $7.39 billion for the year-to-March 2013, missing its own earlier forecast of $7.45 billion. It has stopped providing quarterly guidance since October and now has ceased giving an annual earnings per share forecast -- both critical data for analysts. Barclays capital research head Bhuvnesh Singh said confidence in Infosys\'s guidance remains \"low\". In the past year, it has missed sales targets, lost market share and seen its stock slide as US revenues decline. \"The earnings are very disappointing. The revenue outlook for 2013-14 is in a very wide band,\" said Mumbai\'s Angel Broking analyst Ankita Somani said. In Mumbai trading Infosys fell almost 20 percent to a low of 2,340 rupees before recovering slightly to 2,369 rupees, still down 18.81 percent. Shares in other outsourcers also fell, with market leader TCS down 1.4 percent at 1,514 rupees while another heavyweight, Wipro, was 4.61 percent lower at 383.75 rupees. The results come as Infosys, which is also listed on New York\'s Nasdaq, seeks to reinvent itself with a strategic overhaul to focus on higher value software and consulting services instead of labour-intensive outsourcing services. \"Growth is the biggest challenge for us and we have to get growth back, which will require us to make investments and differentiate our service offerings,\" Infosys chief financial officer Rajiv Bansal told AFP. Chief executive S.D Shibulal said global economic signals remain mixed, \"which is hampering clients\' ability to take quick decisions\". India, with its large English-speaking workforce, accounts for at least 50 percent of the global outsourcing market and the industry is a vital exporter. Analysts say fourth-quarter earnings of Indian companies could be worse than the previous quarter amid struggling economic growth. \"What we have today is due to our own making,\" said Sonam Udasi, IDBI Capital research head, referring to the slow pace of government-led reforms, high inflation and a long stretch of elevated interest rates.

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