Fy13 Guidance: Heed the Warning

This comment was first published in The Free Press Journal, April 14th, 2012

Infosys has never shied away from making tough statements. The events of today are somewhat a replica of what happened on April 15th 2009 too. In that year too, Infosys cautioned the markets about the uncertain economic climate globally and predicted a 3.1-6.7% lower revenues for the next financial year. The share prices dropped on that day by as much as 7.7%.

Similarly, today the markets sent the share price of Infosys spiralling downwards, by more than 9%. Principles of Accounting teach us to be conservative. Given the market scenario today; Eurozone uncertainty, Currency volatility, customers becoming more cost conscious due to the experiences of the past couple of months, all support the guidance given by Infosys.

There are calls by certain analysts who think that TCS should be taken as the benchmark for setting the Industry outlook for the next year rather than Infosys. When a good meaning friend warns you of an impending danger, you have the choice of either analysing the situation and taking heed of the signals that point towards the danger. Or you can change your friend!

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