Infosys forecasts lowest revenue growth in six years; FirstCry’s secondary share sale at $3 billion

Also in this letter:
■ Wagering barred in all forms, be it game of skill or chance: MoS IT
■ Blinkit remains offline in Delhi-NCR as delivery workers continue strike
■ India invites semiconductor suppliers to set up shop in India

Infosys forecasts lowest revenue growth in six years; misses guidance for FY 23

The second-largest software exporter from India, Infosys, has predicted revenue growth of 4-7%, which would be the slowest in the past six years. The company’s FY24 revenue guidance was the lowest since FY18 when it clocked 5.8% growth. This comes at a time when Infosys expects “ramp downs” in client mandates as a result of an uncertain macro environment in its two key markets, the US and Europe.

What’s driving the news: Sequentially, the company’s net profit in the March quarter fell 7% while sales dropped 2.3%. For FY23, the software major reported 15.4% growth in revenue in constant currency terms, which was below the lower end of its guided range of 16-16.5%.

The Bengaluru-headquartered IT major said its FY24 sales are expected to grow by a mere 4-7% in constant currency terms, an indication of the challenges it foresees in the current year. The operating margin is expected to be in the range of 20-22%.

Hiring dips: Infosys reduced its headcount by 3,611 workers during the quarter that ended in March 31, 2022 due to a weak outlook for its services. On a net basis, it hired 29,219 employees, down 46% from the prior year. Headcount at the end of FY23 stood at 343,234. The quarterly attrition rate was at 20.9%, lower than the previous quarter’s rate of 24.3% and the year-ago rate of 27.7%.

What’s ahead? Infosys expects its operating margin between 20 and 21% in FY24. The guidance for FY23 was 21-22%. Operating margin for Q4 FY23 stood at 21%, down 50 basis points sequentially, due to higher employee and travel costs. This compares to a 24.5% operating margin for TCS.

Also read | TCS reports weaker than expected Q4 numbers; flags pain in North American market

Infosys says financial services to get new organisational structure: Infosys on Thursday announced that it would roll out a new organisational structure over the next few weeks for its division serving the financial services sector. This comes after the exit of Mohit Joshi, who led the banking, financial services and insurance (BFSI) vertical at the nation’s second largest information technology firm.

SoftBank may part sell stake in FirstCry valuing the retailer at $3 billion

Omnichannel retailer FirstCry has held talks with a set of sovereign funds to facilitate some of its shareholders to sell a stake in the company at a valuation of nearly $3 billion, three people in the know told ET.

What’s the deal? The latest discussions started after deal talks with private equity firm Kedaara Capital fell through a few months ago, people in the know said. While the talks are still in early-stages, the funding is being primed as a pre-IPO round for Pune-based FirstCry, they said. “Talks are ongoing for a few months, but the deal is yet to be finalised … Middle Eastern sovereigns and some pension funds may come on board in this secondary share sale,” said the person, adding: “The deal contours can change as the discussions move forward.”

Over the last 6-8 months, SoftBank has been partially exiting some of its India investments in listed firms like Delhivery, Paytm, Policybazaar as it looks to distribute cash to its limited partners of sponsors in the SoftBank Vision Fund. In November, last year it sold a $200 million worth stake in digital payments major Paytm along with recently pulling out $130 million from selling shares in logistics firm Delhivery last month.

Also Read: SoftBank to sell nearly all its stake in Alibaba

Wagering barred in all forms, be it game of skill or chance: MoS IT Rajeev Chandrasekhar

The minister of state for electronics and information technology Rajeev Chandrasekhar said wagering on the outcome of a game is barred under all circumstances, irrespective of the game being labelled a game of skill or chance.

Quote, unquote: “There is no need in this framework to get into “nuances” of chance or skill, because the harm of wagering is directly being prohibited – regardless of nature of game,” Chandrasekhar tweeted.

Clarification on “wagering”: Clarifying that the term “wager” was a well-defined expression in contract laws and that several court decisions have clearly defined what wagering meant, he said that although real money games were permitted, those that involved wagering on the outcome of the game were not.

Background: Chandrasekhar’s statement comes nearly a week after the Centre notified the rules for online gaming under which the industry has been allowed to define its own parameters for what online games will operate in India.

“Framework liberates startups..”: In his tweet on Thursday, Chandrasekhar also said the framework for online gaming had been developed after extensive consultation and was quite clear in every aspect. “This framework liberates startups from multiple conflicting state laws, court decisions etc n establishes clarity n growth,” he said.

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Delivery workers strike shuts more than 100 Blinkit dark stores in Delhi NCR

More than half of the 200 dark businesses run by Blinkit, a quick-commerce platform owned by Zomato, have been closed for the past three days in Delhi, Gurgaon, Faridabad, Ghaziabad, Noida, and Greater Noida. In the following days, more stores are likely to fall offline as a result of the ongoing delivery worker strikes.

What’s the issue? Delivery partners will now only be paid a minimum of Rs 15 for each delivery, as opposed to the previous Rs 25, under a new payout system Blinkit implemented in some stores. According to some South Delhi stores, the new payout structure includes a per-kilometer fee based on seven time slots throughout the day. Additionally, under the previous system, deliveries made between the hours of 6 a.m. and 12 p.m. and 6 p.m. and 12 a.m. received an extra Rs 7.

‘Temporarily unavailable’: Customers across Delhi NCR have been unable to place orders at the offline stores with the Blinkit app showing these locations as “temporarily unavailable” on account of the store being under maintenance. Despite ongoing protests by delivery executives, the company plans to implement the changed payout structure in more stores.

Tweet of the day

India invites semiconductor suppliers to set up shop in India

The government is planning to meet companies in peripheral industries for semiconductor manufacturing to learn more about their needs for setting up shops close to the proposed facilities, to help make the India Semiconductor Mission a success, people familiar with the matter told ET.

The industries: Government officials are meeting with representatives of industries such as ultra-pure copper, aluminium, water and gases, and others to understand their requirements for setting up units around the proposed semiconductor manufacturing units.

The idea behind inviting these industries to set up units in India instead of relying on imports was to ensure the fabrication of chips began on time and would not be impacted as much by any disruptions in the global supply chains, another government official said.

Catch up quick: In December 2021, the Centre had announced a $10-billion (roughly Rs 76,000 crore) package to promote semiconductor manufacturing in India. According to the scheme announced in 2021, the central government proposes to offer incentives amounting to 50% of the total cost of the project.

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