Infosys Ltd ADR (NYSE:INFY), India’s software services exporter company, reported quarterly net profit that was below analyst expectations. The dismal numbers indicate that it will take time for the new management to bring back the company on the strong growth path.
The company, once a leading entity of India’s $150 billion IT services market, has in recent years failed to retain market share. The lack of innovation and recent problems are linked to staff exodus that even impacted its ability to acquire impressive deals.
The focus
Infosys said that it was on track to boost growth and expects its revenue to grow to $20 billion by FY2020 from $8.7 billion now. The company prime focus is on acquisitions and to get more new and innovative technology services.
Infosys appointed Vishal Sikka as CEO last year. The changes were made in the top management to implement new plans as the company bets on automation and other services like artificial intelligence. The focus is shifted on high-margin services so as to regain the market share lost to peers including Tata Consultancy Services Ltd.
The expert view
Sarabjit Kour Nangra who is VP of IT Research with Angel Broking said that it is a long-drawn measure and it is not going to reflect immediately. The stock has to be bought for the long-term. Infosys provides IT services to big clients including Wal-Mart Stores, Inc. (NYSE:WMT), Apple Inc.(NASDAQ:AAPL) and Volkswagen AG (ADR)(OTCMKTS:VLKAY).
The net profit in 4Q came at 30.97 billion rupees compared to 29.92 billion rupees in the same quarter, a year ago. The analyst expected the net profit to come at 31.86 billion rupees. Infosys expects its dollar revenue to record growth of 10% to12% for the year ending March 2016. Last year, the dollar revenue growth stood at 7.1%. The pricing for services continues to face headwinds due to increase in commoditization in the traditional outsourcing activities.
