Carlyle-Backed Infotech’s Sales Growth to Slow
Infotech Enterprises Ltd. (INFTC), an Indian software services provider backed by an affiliate of the Carlyle Group, expects sales growth to slow this year as customers defer spending amid a weak U.S. recovery and the Europe debt crisis.
Revenue in dollar terms for the year that started April 1 may rise 14 percent, Chairman and Managing Director B.V.R. Mohan Reddy said in an interview, cooling from a 24 percent gain in the previous 12 months. The U.S. accounts for 60 percent of earnings, while 30 percent comes from Europe for the company that counts the Boeing Co. (BA) and Pratt & Whitney among clients for engineering design software solutions.
“Both the U.S. and Europe are not in the best of shapes and the demand has come down,” Reddy said in the southern Indian city of Hyderabad, where Infotech is based. “The amount spent on research and development by our customers has definitely shrunk in size.”
Global spending on information technology may rise 3 percent in 2012 to $3.6 trillion this year, Gartner Inc. said in a July 9 report, versus 7.9 percent last year. Reports this week showed euro-area services and manufacturing output fell to a 39- month low in September as leaders in the bloc struggled to reverse the region’s slide into a recession. A gauge of leading U.S. economic indicators fell and more Americans than forecast filed unemployment claims.
The National Association of Software & Services Companies, an Indian lobby group, expects the nation’s industry to grow between 11 percent and 14 percent this year.
First Carlyle Ventures bought 10 percent of Infotech from the open market in July. Infotech is in talks with manufacturing sector companies, in which First Carlyle is a stakeholder, for deals, Reddy said.
Shares of Infotech have surged 63 percent in the past year, compared with a 9 percent gain in the benchmark Sensitive Index (SENSEX) in the same period, according to data compiled by Bloomberg. The stock was little changed at 196 rupees as of 10:07 a.m. in Mumbai.
Infosys Ltd. (INFO), India’s second-largest software exporter, cut its sales forecast in July for the year ending March 31 after first-quarter profit missed estimates.
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