Infosys may cut revenue forecast: Morgan Stanley - Times of India

The author has posted comments on this articleTNN | Jul 2, 2013, 05.59AM IST BANGALORE: Infosys may lower its revenue guidance for 2013-14 to 4%-6%, from its forecast in April of 6%-10%, said a report by brokerage firm Morgan Stanley. "We expect first quarter revenues to be flattish, with wage hikes and productivity hitting quarter-on-quarter margins and offsetting rupee depreciation. We believe any cut in revenue guidance and lower quarter-on-quarter margins could limit FY14 EPS upgrades despite rupee depreciation," wrote Morgan Stanley analysts Vipin Khare and Gaurav Rateria in a report released on Monday. For the second successive year, Infosys had forecast its revenue growth at much below the growth that Na sscom has estimated for the IT industry of 12%-14%. If Morgan Stanley is correct, the difference could be worse than originally anticipated. In April when it announced its last quarterly results and its forecast for 2013-14, Infosys's stock fell 21%, its biggest single day fall since 2003. The stock has since revived by about 7%, thanks to the sharp depreciation in the rupee and the return of founder NR Narayana Murthy as executive chairman. On Monday, may be partly in reaction to the Morgan Stanley report, the share price fell 1.83%, a day when the broader sensex rose smartly. "We expect quarter-on-quarter cost increases for Infosys, TCS and Wipro to be higher than quarter-on-quarter revenue growth. TCS commentary could indicate a stable but back-ended year for revenues and higher investments in low-margin, large deals to absorb the tailwind of rupee depreciation," the Morgan Stanley analysts said. Infosys recently announced an 8% increase in salaries for employees based in India effective from July 1. Its employees based in other geographies, who were not given hikes in February, are eligible for 3% increase in their salaries. "A quarter-on-quarter revenue decline for Infosys cannot be ruled out in Q1FY14, with higher costs and wage hikes dragging on margin s in the first half of FY14 - despite the strong inherent operating leverage of its bench," said Khare and Rateria. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNHI2MljQsTjAQ9I1e_YjOK-Ac7kGw&url=http://timesofindia.indiatimes.com/business/india-business/Infosys-may-cut-revenue-forecast-Morgan-Stanley/articleshow/20869359.cms

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