Infosys settles 2.4% lower post Q3 numbers

Infosys, India's second largest IT services exporter, has delivered mixed set of earnings for the third quarter of FY 16-17. Infosys registered a better-than-expected net profit of Rs 3,708 crore in the December quarter, sending its shares 4 per cent higher in early trade on Friday. But, Infosys shares later gave up most of the early gains and settled 2.4 per cent lower.

Q2 Glimpses:

Profit increased 2.8 percent sequentially to Rs 3,708 crore but lowered its full year dollar as well as rupee revenue guidance. Rupee revenue during the quarter slipped 0.2 percent to Rs 17,273 crore and dollar revenue also dipped 1.4 percent to USD 2,531 million as compared with previous quarter, with volume growth of 0.2 percent.

Dollar revenue growth in constant currency went down 0.3 percent Q-o-Q. Its dollar revenue dipped for first time in last seven quarters because of the RBS deal cancellation and seasonal weakness. Infosys has tightened its constant currency revenue guidance for  the 3rd time, to 8.4-8.8 percent. Its upper end of revenue guidance reduced to 8.8 percent from 9 percent but lower end of guidance raised to 8.4 percent from 8 percent.

Financial services & insurance business during this quarter went down 0.8 percent sequentially but rose 0.2 percent in constant currency despite RBS deal cancellation.Revenue from its manufacturing & hi-tech business tanked 1.5 percent Q-o-Q as well as 0.5 percent in constant currency. Retail, consumer packaged goods and logistics segment also noted de growth of 1.5 percent Q-o-Q & 0.4 percent in constant currency, and energy, utilities, communication & services business slipped 2.1 percent and 0.8 percent in constant currency.

Vishal Sikka is of the view that manufacturing was weak on account of the  lower billing days, which would bounce back in Q4 whereas retail remained  volatile and energy was relatively soft. He anticipates certain sectors to bounce back next year barring energy. He feels downward steady pricing pressure is expected to remain, but he optimistic on Q4 and very optimistic about BFSI segment growth.

Indian information technology companies such as Infosys have struggled in 2016 as major clients in the United States and Europe, their biggest markets, held back discretionary spending, awaiting clarity on policy changes under U.S. President-elect Donald Trump's administration, and changes following the UK's Brexit move.

On Friday 13, Infosys share price settled at Rs. 975.80. The stock was trading at Rs. 972.60, down by 27 points.