By Haripriya Suresh
BENGALURU (Reuters) – Infosys, India’s No.2 IT services provider, tightened its full-year revenue forecast on Thursday after reporting a lower-than-expected quarterly profit estimates on sluggish demand from clients amid global economic uncertainty.
The $245-billion information technology (IT) sector, which had gained immensely from a pandemic-induced digital services boom, has been struggling in recent quarters as clients cut spending on non-essential projects amid inflationary pressures and recession fears.Consolidated net profit fell 7.3% to 61.06 billion rupees ($735.55 million) in the seasonally weak third quarter from a year earlier. Analysts, on average, expected a profit of 61.67 billion rupees, as per LSEG data.
Infosys revised its revenue growth forecast for a third consecutive quarter to 1.5%-2% on a constant currency basis for the full year from 1%-2.5% previously.
“As we get closer to full year, the visibility gives us a similar outcome compared to last quarter,” Infosys Chief Executive Officer Salil Parekh said in a press conference.
Clients were not showing any change in behaviour while allocating budgets for IT projects, Parekh added.
“The troubles faced by India-based IT companies are not just transient but are reflective of deeper market and economic shifts,” said Hansa Iyengar, senior principal analyst of London-based tech consulting firm Omdia.
Revenue in the third quarter edged up 1.3% to 388.21 billion rupees, topping the analysts’ average estimate of 387.13 billion rupees, as per LSEG data.
Operating margin was at 20.5%, down from last year’s 21.5%, largely due to wage hikes and furloughs. Infosys, however, retained its operating margin forecast for the full year at 20%-22%.
Large deal signings for Infosys for the quarter were at $3.2 billion versus $3.3 billion a year earlier.
Meanwhile, larger rival Tata Consultancy Services reported a better-than-expected increase in third-quarter revenue, helped by the strong performance in the U.K.
($1 = 83.0130 Indian rupees)
(Reporting by Haripriya Suresh, writing by Sethuraman NR; Editing by Eileen Soreng)
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