Infosys misses profit target

Mumbai: IT bellwether Infosys Technologies on Friday disappointed investors by reporting a lower than expected quarterly performance for the quarter ended June 2016 and also revised downwards its earnings guidance for FY17 amidst slowdown in discretionary spending in its key markets abroad.

The company’s net profit increased 13.4 per cent to Rs 3436 crore as compared to Rs 3,028 crore reported in June 2015 missing street expectation. The company also cut down its FY17 revenue growth guidance to 10.5 per cent –12 per cent from its earlier guidance of 11.5 per cent – 13.5 per cent given just three months back.

“We had unanticipated headwinds in discretionary spending in consulting services as well as slower project ramp-ups in large deals that we had won in earlier quarters, resulting in a lower-than-expected growth in the first quarter,”said Vishal Sikka, chief executive officer, Infosys Tech.

On the impact of Brexit, Mr Sikka pointed out that the development hadn’t impacted the company so far. “As we look ahead to the future clearly (Brexit) is something that many banks are worried about and so forth. In the near term we don’t know how this will play out and so forth. So, given the visibility we lowered our guidance,” he added.

The shares of Infosys tanked 10 per cent in the intra-day trade as soon as the numbers were released and finally closed the day at 1072.25, down 8.81 per cent or '103.60. The sharp slump in the shares of Infosys tripped the four-day rally on the domestic bourses.

The Sensex closed the day at 27,836.50, down 105.61 points or 0.38 per cent while the Nifty ended the day at 8,541.40 losing 23.60 points or 0.28 per cent.

The weak performance registered by Infosys also had an impact on the entire IT pack with Tata Consultancy Services and Wipro too falling 3.11 per cent and 2.81 per cent respectively.