Guidance sets FY09 floor, consensus cuts for FY10 likely
Infosys cut its FY09 USD revenue growth guidance by ~6ppts- 3ppts of
which is on cross currency fluctuations and another 3ppts due to a
weakening macro environment. The guidance implies flat next two
quarters in USD revenue terms. With management reiterating its 25,000
hiring target and a stable pricing outlook, at least part of the guidance
cut appears preemptive, and factors in an increased risk to the revenue
pipeline rather than project cancellations that have already occurred.
The company noted that it was yet to see any direct negative impact on
its business which our recent checks also confirmed. The revised
guidance sets a floor, in our view, and barring a much further
deterioration in the demand situation, looks achievable. The steep
forecast cut is a negative, however, and consensus FY10 USD revenue
growth projections could likely be cut to low double digits.

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