Infosys Cuts Annual Revenue Growth Target In Brexit Precaution

New Delhi: Indian IT services giant Infosys Ltd warned it won't make its previous revenue target for this fiscal year, cutting its outlook after first-quarter earnings came in below estimates and Britain's vote to exit the European Union left the company with little visibility on future business prospects.

Shares in Infosys, India's second-largest IT firm, slumped as much as 10 per cent in Mumbai on Friday on the potential Brexit impact warning.

Infosys said it now expects revenue to grow between 10.5 per cent and 12 per cent in constant currency terms in the year ending March 31, 2017. It previously estimated growth of between 11.5 per cent and 13.5 per cent.

"As we look ahead to the future clearly (Brexit) is something that many banks are worried about and so forth," said Chief Executive Officer Vishal Sikka. "In the near term we don't know how this will play out and so forth. So, given the visibility we lowered our guidance."

Banking and financial services clients contribute a third of Infosys' revenue. The company gets about 23 per cent of its revenues from clients based in Europe, the lowest among peers including top Indian IT firm Tata Consultancy Services.

Mr Sikka said Britain's June 23 vote to leave the European Union hadn't affected the company so far.

Infosys' consolidated net profit for the April-June quarter rose 13 per cent to Rs 3,436 crore ($513 million) from Rs 3,030 crore a year earlier.

Analysts on average had expected a net profit of Rs 3,442 crore, according to data compiled by Thomson Reuters.

"We had unanticipated headwinds in discretionary spending in consulting services," said Sikka, "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 the first quarter."

Shares of Infosys, a bellwether for India's $150 billion IT services industry, were trading 9.3 per cent lower at 0605 GMT.

Under CEO Sikka, Infosys has made bets on automation and other high-margin services such as artificial intelligence and digital technology to regain ground lost to rivals and meet its goal of achieving revenue of $20 billion by fiscal 2020 - more than double revenue of about $9.3 billion in the fiscal year ended last March.

The company said it added three clients to its $100 million-plus category in April-June, taking the total to 17. Total clients grew 14 per cent to 1,126 during the quarter.

($1 = 66.9300 Indian rupees)

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