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Slack seen in Infy growth

Mumbai, April 6: With less than a fortnight left for the fourth quarter results season to kick off, the spotlight has turned on the revenue growth guidance to be given by Infosys for 2014-15.

The Bangalore-based IT major will declare its fourth quarter results on April 15.

Industry body Nasscom has projected export revenues for 2014-15 to grow 13-15 per cent.

At a conference call last month, Infosys CEO S.D. Shibulal had said revenues (in dollar terms) for 2013-14 could come at the lower end of the sales guidance because of slow spending by clients in some of the industry segments such as retail and consumer packaged goods. Infosys said this could impact the base projection for the next fiscal.

In January, the company had forecast dollar revenue growth for 2013-14 would come in the range of 11.5-12 per cent.

Like Infosys, Tata Consultancy Services (TCS), the largest software services company, had also said in a separate meeting with analysts that the March quarter could be a muted one because of falling growth in India and the fact that this period is seasonally slow in the international markets.

Some analysts expect Infosys to report a revenue growth guidance of 6-9 per cent for the year ending March 31, 2015.

“Infosys had earlier cautioned investors on the weakness in hitech and retail verticals which could impact near-term growth. Based on this, we expect the company to guide for 7-9 per cent revenue growth. We believe this will be a conservative guidance given that it needs a CQGR (compounded quarterly growth rate) of mere 1.8-2.5 per cent to achieve it,” Sandip Agarwal, analyst at Edelweiss Securities, said in a note.

An analyst with a foreign brokerage who did not wish to be identified said the upper-end of the guidance could come at 9 per cent. He, however, added that there was a strong possibility of Infosys revising upwards its guidance during the year since 2014-15 is likely to be better in terms of discretionary spending.

Analysts said the market had factored into their calculations the possibility of a tepid performance by Infosys and TCS in the fourth quarter, leading to a fall in their share prices. The focus now is more on the comments with regard to demand and pricing to be given by TCS, Infosys and HCL Technologies.

For the March quarter, Credit Suisse expects Infosys to report a 0.5 per cent dollar revenue growth in sequential terms, though net profits is expected to rise 21 per cent to Rs 2,906 crore.

According to the brokerage, a positive factor from the fourth quarter results of Infosys will be a 50-basis-point jump in margins on account of the cost-cutting measures taken by the company.

 
 
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