Infosys Q4: Why experts term it 'very very bad'

Infosys, India's No. 2 IT services exporter, marginally beat analyst estimates on Friday with a 3.4 percent rise in quarterly profit but its outlook disappointed the market, sending its shares down more than 10 percent in preopen trade.

The company said it expected 2013/14 revenue to grow 6-10 percent, lower than market expectations of 12 percent, and added that global economic uncertainties remain challenging for the industry.

Consolidated net profit for the fiscal fourth quarter ended March 31 was Rs 2,394 crore. Reuters[/caption]

Consolidated net profit for the fiscal fourth quarter ended March 31 was Rs 2,394 crore compared with Rs 2,316 crore in the same period a year earlier.

That compared with an average estimate of Rs 2300 crore in a survey of 18 analysts by Thomson Reuters.

Expert Views

"The forecast looks quite conservative, which is a concern. The fiscal 2013 was also not very good for Infosys. This looks like company specific problem. Even mid-cap companies are expected to perform better than this.

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"The overall recovery in the US and stabilisation in Europe is expected in the second half of this year and that may help Infosys a little," said KK Mital, CEO, Portfolio Management Services, Globe Capital.

"The outlook is slightly negative compared to the expectations. We expect selling pressure in the short-term as the stock ran up sharply in the past couple of sessions. Investors who took positions are likely to cut exposure and wait for further clarity to take a fresh bet on the stock," said Suresh Parmar, Aassociate VP and Head of Institutional Equities at KJMC Capital Markets.

"The results are very bad; very, very bad. The guidance is especially bad," Nimish Joshi, Equity Analyst, CLSA.