“Infosys’ results were below our expectations. The company has also missed the FY13 revenue guidance. Moreover, the wide range of FY14 revenue guidance took us by surprise. It is much below the NASSCOM guidance for FY14. The company has not provided the EPS guidance.
The lower-than-expected results and the FY14 guidance (6%-10% revenue growth and no EPS guidance) reflects the uncertain macro environment and the pricing pressure which the company is experiencing. Infosys is experiencing delays in decision making by clients and also delays in ramp-ups. The lack of stronger revenue growth despite the pressure on realisations which the company is facing in the non-discretionary space, is concerning. We expect the stock to remain under pressure.
The management commentary from industry peers will be important to determine whether the pressure faced by Infosys is company-specific or an industry-wide phenomenon.”
By: Dipen Shah, Head of Private Client Group Research, Kotak Securities
The lower-than-expected results and the FY14 guidance (6%-10% revenue growth and no EPS guidance) reflects the uncertain macro environment and the pricing pressure which the company is experiencing. Infosys is experiencing delays in decision making by clients and also delays in ramp-ups. The lack of stronger revenue growth despite the pressure on realisations which the company is facing in the non-discretionary space, is concerning. We expect the stock to remain under pressure.
The management commentary from industry peers will be important to determine whether the pressure faced by Infosys is company-specific or an industry-wide phenomenon.”
By: Dipen Shah, Head of Private Client Group Research, Kotak Securities
