Infosys today reported over 13 per cent rise in June quarter net profit on new client additions, but slashed its annual sales forecast sending the stock crashing the most in a single day since Vishal Sikka became CEO more than two years ago.
Consolidated net profit stood at Rs 3,436 crore during the quarter ended June 30. Revenue for the April-June quarter of current fiscal was up nearly 17 per cent year-on-year to Rs 16,782 crore.
India’s second largest IT services company forecast a 10.8-12.3 per cent sales growth in US dollar terms for 2016-17, down from the previous forecast of 11.8-13.8 per cent as it factored in uncertainties arising out of Britain’s decision to exit from the European Union.
The cut in guidance sent stock crashing by 8.8 per cent to close at Rs 1,072.25 on the BSE.
This was more than 8.54 per cent slide in stock on March 13, 2014 but less than 22.24 per cent slump witnessed on April 12, 2013. The previous two big slides too followed the company reporting sluggish growth in revenues.
“We had unanticipated headwinds in discretionary spending in consulting services and package implementations 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 Q1,” Sikka said.
The full-year revenue guidance at 10.5-12 per cent in constant currency terms is lower than its April forecast of 11.5-13.5 per cent.
Since taking over the helm of Infosys in August 2014, Sikka has focused on “transforming” Infosys by betting big on automation and high-margin areas like artificial intelligence and digital.
Setting a target of USD 20 billion revenue by fiscal 2020, from USD 9.3 billion in 2015-16, he has helped Infosys value rise by 40 per cent in last two years.