The Telegraph
Thursday , March 13 , 2014
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Infy warns of slow growth

Murthy: Worried

Mumbai, March 12: Infosys has cautioned that revenue growth during this financial year may come at the lower end of its guidance because of some rather tight spending by some of its clients.

In January, the country’s second largest software services exporter had forecast that revenues in dollar terms would rise between 11.5-12 per cent for 2013-14.

This was lower than the projection made by industry body Nasscom, which expected software exports from the country to grow around 13 per cent this year.

Speaking at an investors’ conference organised by Barclays, Infosys chief executive S.D. Shibulal said the company could see revenues (in dollar terms) for this year coming at the lower end of the sales guidance because of slow spending by clients in segments such as retail. He indicated that this could have an impact on the base projection for the next fiscal.

Incidentally, Nasscom has projected that export revenues for 2014-15 will grow 13-15 per cent to $97-99 billion.

Shibulal’s remarks come at a time market confidence in Infosys has improved with the company reporting better- than-expected performance for the past two quarters. The caution led to the Infosys ADR slumping nearly 7 per cent on the New York Stock Exchange.

N.R. Narayana Murthy, who was also present at the conference, said he was not satisfied with the performance of Infosys over the past couple of years.

“We expect to be somewhere between 11.5 per cent and 12 per cent. Much more like 11.5 per cent,’’ Murthy, who shared Shibulal’s views on the growth forecast, said.

The Infosys executive chairman, who returned from retirement last year to head the company, added that lower operating margins were one of his major concern, which needed to be addressed.

According to Murthy, the operating margins were now at around 23.5 per cent after going up to 25 per cent in the third quarter of this year whereas it should have been at 41.5 per cent under normal circumstances.