India’s Infosys cuts top end of FY revenue outlook

By Sethuraman N R and VarunVyas Hebbalalu

BENGALURU (Reuters) -Infosys cut the upper end of its annual revenue forecast on Thursday, raising concerns about near-term demand for services provided by the $245 billion Indian information technology sector.

The No.2 Indian software-services exporter said it now sees full-year revenue growth at 1%-2.5% excluding foreign exchange volatility, versus a prior view of 1%-3.5%.

Infosys’ results come a day after industry leader Tata Consultancy Services warned that clients were still hesitant to spend on discretionary projects amid inflationary pressures and high interest rates.

“Digital transformation programs and discretionary spends are low and decision-making is slow,” Infosys Chief Executive Officer Salil Parekh said on Thursday.

The company is seeing project ramp-ups being pushed to the back end of the year, Parekh said.

Infosys’ U.S.-listed shares fell 3.3% in premarket trading. Its Mumbai-listed shares closed 1.9% lower ahead of the results.

“We continue to see a significant amount of market hesitancy resulting in delayed revenue. This is driven by uncertainty about the economic cycle and the increasing conviction that a recession is likely in 2024,” Peter Bendor-Samuel, chief executive at research firm Everest Group, said.

The industry is unlikely to see significant acceleration until the second half of next year, he added.

Infosys, which had offered jobs to roughly 51,000 freshers in fiscal 2023, is not going to campus for recruitments “at the moment”, Infosys Chief Financial Officer Nilanjan Roy said.

Its consolidated net profit rose to 62.12 billion rupees ($746.46 million) in the quarter ended Sept. 30, from 60.21 billion rupees a year ago. Analysts had expected a profit of 62.95 billion rupees, as per LSEG IBES data.

Large deal signing for Infosys jumped nearly three-fold from the year-ago period to $7.7 billion in the quarter.

The company, however, retained its operating margin forecast for the full-year at 20%-22%, after reporting a decline during the quarter to 21.2% from 21.5%, a year ago.

(Reporting by Sethuraman NR, VarunVyas Hebbalalu and Indranil Sarkar in Bengaluru; Editing by Nivedita Bhattacharjee and Dhanya Skariachan)