The Telegraph
Since 1st March, 1999
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Profit pangs wear down Wipro
- Share plunges 10% as first-quarter numbers trail market forecasts

Mumbai, July 18: A 43 per cent leap in Wipro’s consolidated first-quarter net profit at Rs 206.10 crore fell short of market expectations, sending its share through the shredder on another day of losses at Dalal Street.

Though the profit marked a 9 per cent rise over the figure reported in January-March 2003 and was sharply higher than the Rs 144.10 crore in April-June 2002, it did little to buoy investors pining for a rosier scorecard.

The dismay deepened when they realised that on a stand-alone basis, the net profit showed an increase of only 18 per cent at Rs 196.8 crore against Rs 166.5 crore.

For some, the sense of let-down was more acute when they measured the numbers against the stiff yardsticks of US accounting standards. That diluted the profit gain to a modest 5 per cent at Rs 178 crore. The mean forecasts had hovered in the region of Rs 210 crore.

The Wipro share lost 10 per cent, plumbing an intra-day low of Rs 838 before recovering to Rs 917 — still a 2.33 per cent decline over its previous close of Rs 938.90.

Chairman Azim Premji said the results reflected “an environment of volume growth coupled with an appreciating rupee”. He projected second-quarter revenues of around $ 210 million from global IT services and products, which includes revenue from IT-enabled services. That would be a sequential 5.6 per cent rise.

For the quarter ended June, total income increased to Rs 1068.6 crore from Rs 926.1 crore in the same quarter last year; consolidated revenue stood at Rs 1198.9 crore against Rs 930.2 crore in April-June 2002. The ratio of operating margins to revenue was 22.2 per cent, down 8.7 per cent year-on-year and 2.3 per cent sequentially. The fall was blamed on lower price realisations and higher costs, though company officials said there is the probability of a recovery this quarter.

Global IT services and products, which grew 45 per cent to Rs 913.6 crore, accounted for 77 per cent of total revenues. Nervewire, acquired in May and a part of this division, suffered a Rs 10.5-crore loss on revenues of Rs 11.9 crore.

However, the contribution from West Asia, East Asia and Asia Pacific to revenues dipped to Rs 160.2 crore from Rs 190.7 crore in the same period last year. On the other hand, the consumer care and lighting wing recorded a sales growth of 9 per cent at Rs 79.8 crore.

“During the quarter, we have kept up our success in selling business process outsourcing (BPO) and energy & utilities consulting services to our existing clients. Our BPO business grew 19 per cent over the previous quarter,” company vice-chairman Vivek Paul said.

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