Written By The Bengaluru-based company had earlier forecast a sales growth of 12% to 14% for the current fiscal year. However, Infosys’s revenue guidance was revised downwards to 11.5% to 13.5% for the year ending March 2022, citing a challenging business environment.
The news sent shockwaves through the stock market, with Infosys shares falling by more than 7% in early trade on Thursday, erasing over $8 billion from the company’s market value.
Infosys CEO Salil Parekh said in a statement that the company’s revised sales guidance reflected the “uncertain times” caused by the COVID-19 pandemic, as well as the supply chain challenges and increased competition in the industry.
“The COVID-19 pandemic continues to impact the world, with ongoing lockdowns and travel restrictions affecting the industry’s ability to operate normally,” Parekh said. “We remain cautious in our outlook for the near-term.”
Infosys’s disappointing sales outlook comes at a time when the Indian software services industry is facing a slowdown due to the pandemic. The industry, which contributes around 8% of India’s gross domestic product, has been hit hard by the pandemic, with clients cutting back on technology spending and delaying projects.
Infosys’s peers, including Tata Consultancy Services and Wipro, have also reported lower-than-expected quarterly earnings in recent months, signaling a broader slowdown in the industry.
Despite the challenges, Infosys reported a net profit of $697 million for the quarter ended June, up 22.7% from the same period last year, on the back of strong demand for digital services.
However, investors remain concerned about the company’s ability to sustain its growth momentum in the long run, given the weak sales outlook.
“Infosys is going through a phase of uncertainty, with a slowdown in the industry and increasing competition,” said Anuj Kapoor, a senior analyst at Investec Securities. “The company needs to focus on innovation and building new capabilities to remain competitive in the long run.”
Infosys’s management, meanwhile, remains optimistic about the company’s future prospects. The company said it would continue to invest in digital services, automation, and cloud technologies to stay ahead of the competition.
“We remain confident in our ability to navigate through the challenging environment and emerge stronger in the future,” Parekh said.
The next few quarters will be critical for Infosys, as the company seeks to regain the confidence of investors and overcome the headwinds facing the industry. The software services giant will need to demonstrate that it can adapt to the changing market conditions and continue to deliver strong results in the face of intense competition and a challenging business environment.
