Infosys Hikes Sales Outlook, Defying Recession Fears
Infosys Ltd. raised its annual sales forecast, defying fears…
Infosys Ltd. raised its annual sales forecast, defying fears that a global economic slowdown would push clients at the outsourcing giant to cut back on tech spending.
The Bengaluru-headquartered company said it expected revenue to grow between 15% to 16% in the year to March 2023, raising the lower end of its sales outlook, while reiterating the top end.
Seen as a bellwether of India's $227 billion IT sector, the country's No. 2 software services exporter and rivals such as Tata Consultancy Services Ltd. have so far remained upbeat about winning new business deals. But concerns of a global recession and a European energy crisis continue to weigh on the sector, which remains vulnerable to cuts in discretionary IT spending.
WHAT BLOOMBERG INTELLIGENCE SAYS
Despite strong growth at most sectors, we don't expect any upgrades to full-year guidance due to rising recession risk, yet we do expect management to be more downbeat in its remarks about future spending.
- Anurag Rana, analyst
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Infosys's net income rose 11% to 60.2 billion rupees ($731 million) in the second quarter ending in September, it said in a filing. That beat an average analysts' estimate of 59.02 billion rupees in a Bloomberg survey. Quarterly sales rose 23% to 365.4 billion rupees. The company also announced the buyback of 50.3 million shares for as much as 93 billion rupees at 1,850 rupees per share.
Larger rival TCS reported an 8% rise in its quarterly income earlier this week, but cautioned it needed to be more wary of uncertainties in the face of rising volatility. IT companies such as Infosys, which won over clients in North America and Europe by offering low-cost solutions to problems such as the Y2K bug, are now banking on services such as cloud computing, machine learning, artificial intelligence and analytics to shore up revenue.
Global technology spending faces headwinds, however, as businesses bring employees back to workplaces, dampening pandemic-era demand. Rising competition from global IT giants such as Accenture Plc and International Business Machines Corp. are also weighing on margins at India's software services companies.