Mumbai, Nov. 2: After wowing the Street with its demerger plan on Thursday, Wipro Ltd today delivered a pleasant surprise by posting a better- than-expected 24 per cent jump in net profit at Rs 1,611 crore in the second quarter ended September 30.
Profits in the same quarter a year ago amounted to Rs 1,301 crore.
The company’s operating margins for its core IT business also came in higher than expectations.
Analysts were expecting the Bangalore-based IT services exporter to post profits between Rs 1,400 crore and Rs 1,500 crore.
However, the good news did not end there. Operating margins at its IT business came in at 20.7 per cent, higher than analyst projections even though the company had offered a wage increase during the period. Analysts such as Ankita Somani of Angel Broking had expected Wipro to post an operating margin of 19.3 per cent. The consolidated operating margin was put at a robust 17.3 per cent, a rise of nearly 107 basis points.
Wipro has disappointed investors with its guidance in the past few quarters. Not any more: it projected that revenues from IT services for the December quarter would be in the range of $1.56 billion to $1.59 billion, a rise of 1.3-3.2 per cent over the September quarter. Although this was in line with the estimates of some analysts, experts said it was marginally higher than the guidance given in the past.
These three factors provided the ballast for the stock that surged over 3 per cent on the bourses today. However, the share ended off these highs at Rs 364.95, a gain of nearly 1 per cent over its previous close.
Wipro posted a revenue of Rs 10,657 crore, a 17 per cent growth over the year-ago period. IT services revenue rose 23 per cent to Rs 8,373 crore.
“Our focus on driving significant operational improvements has helped us predominantly mitigate the incremental impact of wage increases and currency volatility,” executive director and chief financial officer Suresh Senapaty said.
The company added that the IT services segment had 140,569 employees as of September 30, an increase of 2,017 people in the quarter. On the other hand, it added 53 customers during the period.
Rajni Ghildiyal & Vimal Gohil, analysts at Asit C. Mehta Investment Intermediates, said the higher operating margins were because of the lower-than-expected increase in salary expenses in the quarter. They added that most of the revenue growth came from an increase in onsite and offshore pricing.