Infosys Technologies well known for building luxury IT campuses on land acquired at cheap prices from various Governments, today reported results for Q1FY09, which are below expectations. Infosys and other Indian IT companies which are mainly dependent on outsourcing were dumped on the bourses in afternoon trading. Infosys led the massive sell off in IT stocks with loss of 7.11%.
Infosys reported revenues of $1155m (1.1% qoq), below Street expectations. Margins declined ~210 bps, in line with expectations. The company had forex hedging loss of US$19m.
A sharp decline of ~22% qoq in revenues from the top client came as a negative surprise; Infosys is heavily dependent on BFSI segment which is witnessing global turmoil. Analysts were unhappy because of the self praising management’s lack of vision to mitigate such risks in the past 2-3 years.
The management guided that Environment is challenging and some delays in decision making and clients reluctant to spend despite budgets. Moderation in wage hikes is expected going forward. The company is expecting to report a full year EPS of Rs 101 to Rs 102.