Wipro profit beats forecast

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By OUR SPECIAL CORRESPONDENT
  • Published 24.07.10
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Mumbai, July 23: Wipro Ltd today beat Street estimates by posting a 31 per cent growth in net profit during the first quarter ended June 30, underpinned by a strong demand for outsourcing.

The Bangalore-based company saw consolidated net profits rising to Rs 1,319 crore from Rs 1,010 crore in the corresponding period last year.

IT analysts had projected that the company would post a net profit of around Rs 1,200 crore.

The strong growth came on the back of a 16 per cent vault in total revenues that rose to Rs 7,236 crore from Rs 6,246 crore in the same period last year on higher volumes in the software services business.

Wipro forecast that revenues from IT services would be in the range of $1.25 billion to $1.28 billion for the quarter ended September 30, a sequential rise of 4.1-6.1 per cent.

“We are seeing strong demand across verticals despite macro challenges. We added the highest number of billable employees ever in this quarter. Our guidance reflects this momentum,” chairman Azim Premji said.

A key highlight of Wipro’s performance was the surge in margins by 30 basis points to 24.5 per cent despite an increase in the wage bill and a decline in price realisation.

Company officials said better operational efficiency was one of the major reasons behind the margin expansion.

However, on a standalone basis, net profit of Wipro came down to Rs 1,110 crore (Rs 1,198 crore) during the quarter, an indication that its subsidiaries delivered a strong performance in the period.

Wipro’s IT services recorded revenues of Rs 5,500 crore, an increase of 14 per cent over the same period last year. The segment added 22 clients during the quarter, and there was a net addition of 4,854 employees in the quarter.

The Wipro stock initially reacted positively to the results and leapt to an intra-day high of Rs 433 after opening at Rs 425. However, the gains were wiped out at the end of the day when it closed at Rs 412.10, a drop of Rs 3.50.

In the IT services business, financial services was the largest source of revenues, accounting for nearly 27 per cent, Suresh Senapaty, executive director and chief financial officer said.

In the preceding quarter, this sector generated 26.1 per cent of the IT service revenues. Sequentially, the contributions from technology, media and telecom (TMT), manufacturing and retail increased even as that from healthcare and services and that from energy and utilities came down.

In terms of geographies, the revenue share of Europe fell to 25.4 per cent from 26.3 per cent in the preceding quarter.

Wipro added that during the period, its consumer care and lighting business segment recorded revenue of Rs 641 crore, an increase of 23 per cent over the same period last year.