Infosys shares sink 8.5% after Murthy comments

Infosys also suffered unanticipated cancellations and some projects were slowed down because of a lack of workers with relevant skills.

Infosys shares on Thursday plunged 8.54 per cent after chairman Narayana Murthy said that revenue for FY14 could grow at the lower end of the company’s 11.5-12 per cent projection. The stock closed down by Rs 313.40 at Rs 3,357.50 on the Bombay Stock Exchange.

Infosys founder Murthy has forecast an operating margin of 23.5 per cent, down from 29.5 per cent in the year to March 2011 before his return. “We are not very happy with our performance over the last two years,” Murthy said at an investor presentation organised by British bank Barclays in Bangalore on Wednesday.

He has sought to refocus on big-ticket contracts and build a “predictable earnings model” within three years of re-appointment. Murthy’s comments “came as a negative surprise to the street. We have been cautious as the guidance … was not very spectacular,” said Dipen Shah, head of Kotak Securities’ private client group. Sensex ended lower by 81.61 points, or 0.37 per cent, at 21,774.61 points.

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Infosys chief executive SD Shibulal said that of particular concern was reduced spending on personal computers by high-tech enterprises and by retail customers pressured by holiday discount costs. Infosys also suffered unanticipated cancellations and some projects were slowed down because of a lack of workers with relevant skills, Shibulal said.

“While we saw some initial results of our efforts in the last few quarters, we expect near-term performance to be choppy,” he said.