By Sethuraman N R
BENGALURU (Reuters) – Infosys cut the upper end of its annual revenue outlook on Thursday, raising concerns about near-term demand for the 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% on a constant currency basis, versus a prior view of 1%-3.5%.
U.S.-listed shares of Infosys fell 2.6% in premarket trading. Shares listed in Mumbai closed 1.9% lower ahead of the results.
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.
“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, told Reuters.
The industry was not likely to see significant acceleration until the third and fourth quarter next year, he added.
Consolidated net profit at Infosys 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.
Last month, leading global IT services provider Accenture forecast full-year earnings and first-quarter revenue below Wall Street targets.
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 guidance 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 and Indranil Sarkar in Bengaluru; Editing by Nivedita Bhattacharjee)
