Bangalore, April 12
Infosys Ltd forecast full-year sales growth that missed analyst expectations by a margin of up to 50 percent, dimming investor hopes that India's No.2 software services firm will soon start reaping the benefits of its strategic revamp.

Infosys forecast on Friday dollar revenue to grow between 6% and 10% for the fiscal year that began this month. That was less than analysts' estimates for revenue growth of as much as 12%, and slower than a gain of 12% to 14% expected for the overall industry. Shares of Infosys tumbled 21.3%, eroding Rs 35,740 crore from its market value.

“Global economic uncertainties remain challenging for the IT industry,” Infosys CEO & MD S.D. Shibulal said after the company announced its financial results for the fourth quarter (Jan-March) of FY 2012-13.

Q4 PROFIT: Net profit was Rs 2,394 crore for the quarter ended March 2013 with QoQ growth of just about one percent and YoY growth of about 3.4%. earnings per share stood at Rs 41.89 for the quarter. The board recommended a final dividend of Rs 27 per share for fiscal 2013.

Revenue for the quarter rose 18% to Rs 104.5 billion. That compared with an average estimate of Rs 23 billion in a survey of 18 analysts by Thomson Reuters I/B/E/S. Revenue was estimated to grow 21% to Rs 107 billion.

Infosys posted a net profit of Rs 9421 crore for the year ended March 2013 as compared to Rs. 8316 crore for the year ended March 2012. Total income rose from Rs 35,638 crore for the year ended March 31, 2012 to Rs 42,711 crore for the year ended March 31, 2013.

The company, which had been losing market share for about two years to industry leader TCS and smaller rivals like HCL Technologies, has cut its pace of hiring to the slowest in three years with the aim of boosting profitability. Yet Infosys said on Friday that margins will be under pressure in the near term.

"The (revenue) forecast looks quite conservative, which is a concern. Fiscal 2013 was also not very good for Infosys," said K.K. Mital, CEO for portfolio management services at Globe Capital in New Delhi. "This looks like company-specific problem. Even midcap companies are expected to perform better than this."

Infosys, once seen as a trendsetter for India's $108 billion outsourcing services industry, has turned in a string of disappointing results, except for in January when it surprised the market by raising its outlook.

The rough patch was caused in part by the challenge of implementing its "Infosys 3.0" push for revenue through the development of its own software platforms, to differentiate its services from those of its competitors, amid sluggish demand from clients in its core western markets. In a sign this strategy has yet to deliver, its products and platforms services contributed 5.7% of its overall revenue in the March quarter, down from 6.2% a year earlier.

Infosys said it expected margins and pricing for its services to be under pressure in the short term. Analysts also said that the absence of an outlook for EPS from the firm, which stopped giving quarterly forecasts last year, was a reflection of uncertainty.

Sensex plunges 300 pts as Infy scrip drops most in a decade; other IT stocks also dip

Hit by over 21% plunge in Infosys shares on disappointing earnings, the BSE benchmark Sensex today tumbled by nearly 300 points to end at 18,242.56 despite better-than-expected industrial production as well as consumer price inflation data. The Sensex, which had gained 316 points in last two sessions, dropped by 299.64 points, or 1.62% to 18,242.56. Similarly, the broadbased NSE index Nifty lost 65.45 points, or 1.17% to 5,528.55. The second biggest software exporter, Infosys plunged by 21.33% to Rs 2,295.45, recording its biggest single day fall since April 2003, after lower-than-expected revenue outlook for fiscal 2013-14 and disappointing Q4 earnings. "The main reason for the decline in benchmark indices was the big fall in share price of Infosys," said Nagji K Rita, CMD, Inventure Growth & Securities. The markets ignored sentimentally positive macroeconomic data like February IIP at 0.6% as against street expectations of marginal decline and CPI based inflation declining to 10.39% in March, said brokers. After the steep fall in Infosys, which alone dragged the Sensex deep into negative terrain, other software exporters such as TCS, HCL Tech, Wipro and Tech Mahindra also declined. — PTI

New Delhi, April 12
An economic rebound will have to wait as the industrial growth dropped to 0.6% in February and the worrying part is that there has been a fall in electricity production for the first time in many years.

The weak IIP numbers along with some moderation in retail inflation has led to analysts expecting a 25 basis points cut in repo and even possibly CRR by the RBI on May 3.

Showing signs of a slump in the economy, the Index of Industrial Production (IIP) slipped to 0.6% in February from 4.3% in the corresponding month a year ago.

Retail inflation, according to the Consumer Price Index (CPI) data released on Friday, declined marginally to 10.39% in March, snapping the five month rising trend, as prices of vegetables and protein based items eased.

The worry now is that the core industries are performing badly. According to Crisil Research, India’s core industries, the economy’s lifeline, are slipping badly. February IIP data shows a decline in electricity output compared to the same month last year. Coal and gas shortages are partly to blame for this fall in power generation for the first time in several years and mining output has contracted in 18 out of past 20 months.

A rebound in industrial growth remains elusive and recovery may still be distant. Commenting on the IIP data, CII director general Chandrajit Banerjee said the IIP growing at a meager 0.6% in February, reaffirms the view that the rebound in industrial production remains elusive as weak investor confidence and subdued consumer demand continue to constrain growth.

“Coming close on the heels of a sharp decline in core sector growth and a drop in car sales to a decadal low, the situation warrants remedial action. While a slowdown in manufacturing sector continues to be an area of concern, what is extremely worrisome is the sharp fall in mining and electricity production which have gone into negative territory. The February data also corroborates the CII’s position that the recovery may take some time”, he added.

Assocham president Rajkumar Dhoot said both the macroeconomic numbers — factory output and retail inflation clearly point to a dismal state of affairs in the Indian economy requiring urgent and bold steps. He said an all-out effort must be made to restore investor sentiment and consumer confidence. “Both stand shaken today. While it is true that the global factors have aggravated the situation, there is not much enthusiasm in the domestic economy as well,” Dhoot added.

New Delhi, April 12
Gold prices in India, the world's biggest buyer of the metal, hit a 11-month low and fell below the Rs 29,000 mark, a level keenly watched by importers and jewellers to restock gold for weddings and festivals.

Taking weak cues from the global markets, gold fell by Rs 239 to Rs 28,945 per ten grams in futures trade today as participants indulged in trimming their positions.

At the Multi Commodity Exchange, gold for delivery in June traded Rs 239, or 0.80% to Rs 28,945 per ten grams in a turnover of 17,328 lots.

Standard gold of 99.5% purity plunged by a hefty Rs.500 to finish at Rs.28,890 per 10g from Wednesday’s closing level of Rs.29,390.

Market analysts said a weak trend in the overseas markets as investors cut holdings of the metal on fears the US Federal Reserve might scale back stimulus, mainly put pressure on the gold futures here.

The wedding season has begun in India and will continue till early June.

Silver, too, slumped on aggressive speculative sell-off coupled with subdued industrial offtake.

Globally, gold fell by US $12.20, or 0.78 per cent to $1,549.80 an ounce in London. — PTI/Reuters