Infosys Ltd, India’s second-largest IT services company, on Wednesday lowered its revenue guidance for the financial year 2024 to a range of 1% to 3.5%, from 4% to 7% earlier.
The company’s revenue growth for the first quarter ended June 2023 was 1.3%, lower than the 3.9% growth in the same quarter last year.
Infosys CEO and Managing Director Salil Parekh said the company’s performance in the first quarter was below expectations due to a number of factors, including the ongoing Russia-Ukraine war, rising inflation, and supply chain disruptions.
“We have taken a cautious stance and revised our guidance for FY24 to reflect the current market conditions,” Parekh said.
The lower revenue guidance sent Infosys’ stock tumbling by 7.35% to Rs 1,342.30 on the BSE.
Omkar Tanksale, a senior research analyst at Axis Securities, said the magnitude of the cut in Infosys’ revenue guidance was a surprise, given the company’s strong project execution pipeline.
“The lowered guidance raises questions about Infosys’ prospects for the current fiscal year,” Tanksale said.
Despite the lowered revenue guidance, Infosys said it will continue to focus on cost optimization and margin expansion.
The company’s operating margin for the first quarter was 20.8%, in line with expectations.
Infosys’ margin expansion program will focus on areas such as pyramid efficiency, automation, and improving critical portfolios.
The company will also continue to invest in new technologies, such as cloud computing and artificial intelligence, to stay ahead of the competition.
Infosys’ performance in the first quarter was a reminder of the challenges facing the IT services industry.
The war in Ukraine, rising inflation, and supply chain disruptions are all weighing on IT spending.
However, Infosys is well-positioned to navigate these challenges, given its strong track record of execution and its focus on innovation.
The company’s ability to deliver on its guidance in the coming quarters will be closely watched by investors and analysts.