Wipro delivered revenue growth better than market expectations and also ahead of peers, including Infosys and TCS, for the December quarter.
Growth in key segments, improvement in the proportion of fixed-price projects, and reasonably healthy customer additions were the positives for the company.
It was also able to maintain operating margins at 21.8 per cent level, despite volatility in the movement of several currencies. Wipro has also guided for a healthy March quarter, with a three per cent sequential growth in revenues.
During the third quarter, Wipro’s revenues grew 1.3 per cent sequentially in dollar terms when Infosys managed 0.8 per cent increase and TCS reported nearly unchanged topline numbers for the December period.
For all the three IT majors, North America delivered well as has the Indian geography. Growth for IT majors from India has been due to revival in the IT spends of the private sector.
For Wipro, manufacturing, healthcare and retail segments grew at 1.6-6.1 per cent sequentially during the quarter, indicating reasonably broad-based traction across verticals.
Finance solutions, though, expanded at an anaemic pace during the quarter for Wipro, whereas for Infosys and TCS it was quite healthy.
This slow pace of growth was attributed by Wipro to tepid traction in the insurance segment.
Fixed price projects, which ensure better margins than time & material contracts increased contribution from 53.1 per cent to 55.1 per cent during the December period.
The company added one customer each in the $50 million and $75 million brackets and three in the $10-million category.
In this aspect, Infosys and TCS scored with additions in the $100-million bucket and stronger additions in the $50-75 million categories. Wipro has also been able to tap discretionary spends of clients reasonably well.
The company has indicated challenges in the pricing front, especially in the energy and utilities segment.
Catching upIf Wipro manages to achieve the upper end of its guidance for the fourth quarter, its revenue growth for FY15 would be about 8 per cent.
This means that it would be at levels that Infosys will likely achieve during 2014-15. However, these levels are still much lower than the industry’s likely revenue growth rate of 13-15 per cent for FY15.
But by delivering better numbers than TCS and Infosys after many quarters and by getting key growth ingredients back, Wipro would be looking at growing at industry rates from FY16.