Wipro’s March quarter numbers continued to be lackadaisical even as the gulf in the rate of growth between the company and its peers widens.
Fall in financials, dip in revenues from key verticals, anaemic growth in service offerings and a decline in price realisations have made it a rather weak quarter for the company.
During the period, Wipro’s revenues as well as EBIT (earning before interest and taxes) fell marginally, when its peers reported a 0.3-2.4 per cent revenue growth sequentially.
In dollar terms, the company’s revenues grew 0.5 per cent – the lowest when compared to TCS, HCL Technologies and Infosys. While volume (person months billed) growth was reasonably good at 2.5 per cent, a more than 2 per cent decline in realisations meant that the company posted a weak set of numbers.
Key segments weak
For Wipro, an important point of concern during the quarter should be the 1.5 per cent fall in revenues from its largest vertical, finance solutions, when all of its peers saw significantly higher growth from the segment. Revenues from telecom too fell, while manufacturing and healthcare grew 2.4-3.3 per cent.
These points suggest a sluggish demand environment for the company. Its revenues from Europe fell, while growing well for its peers. Of course, India and other Asia-Pacific geographies have grown for the company at a healthy pace, but margins tend to be lower in these countries.
The company’s application development and maintenance offerings witnessed a 3.4 per cent fall in sales, suggesting that the company may not be tapping into the non-discretionary spends of clients. Other service offerings have grown, albeit at a marginal pace.
Client addition, especially of the larger variety too, has left a lot to be desired for Wipro, what with no increase in the count of customers in the $50-100 million category. Of course, the case was similar with TCS and HCL as these companies too did not have any significantly large customer additions.
Wipro has indicated that it would give a pay hike next quarter, which would affect its operating margins. Its revenue guidance for the June quarter too is quite anaemic. Clearly, only TCS and HCL seem to be on course to achieve Nasscom’s growth target for the industry of 12-14 per cent for FY14.