Wipro Q1 net rises a modest 1.2%; outlook disappointing

Backed by its clients' continued focus on optimising operations, Wipro Ltd posted 1.23 per cent year-on-year growth in its consolidated net profit.

Although analysts described the performance as marginally below expectations, the Wipro Chairman, Mr Azim Premji, said the company was “seeing early signs of positive momentum after the reorganisation”.

The country's third largest software exporter reported a net profit of Rs 1,334.9 crore in the April-June quarter compared with Rs 1,318.6 crore in the corresponding period last year. “Clients continue to focus on optimising operations, creating new products and getting access to newer markets. We will continue to make investments that bring superior value to our clients as they try to win in this market,” said Mr Premji.

The company's revenues went up 18.3 per cent to Rs 8,564 crore (Rs 7,236.4 crore). Wipro's operating margin dipped to 22 per cent (24.7 per cent).

Mr Suresh Senapaty, Executive Director and Chief Financial Officer, said, “We have maintained our operating margins despite one-month impact of salary revision.” IT services contributed Rs 6,405 crore, or 16 per cent year-on-year growth. PBIT (profits before interest and tax) grew 4 per cent year-on-year to Rs 1,407 crore. Sequential growth this quarter was hit and stood at 0.5 per cent (3.2 per cent). The company added 49 new customers this quarter, compared with 22 in the same quarter last year. The number of clients contributing $100 million or more doubled to 4 this quarter. Similarly, the number of clients contributing $75 million or more went up to 12 (9) in the same period and those contributing $50 million clients went up to 24 (17).

IT services added 4,105 employees during the quarter taking the employee count to about 1.26 lakh.

Revenue growth across verticals showed a mixed trend. While manufacturing and hi-tech registered a de-growth to 19.7 per cent (21.5 per cent), retail and transportation grew marginally to 15 per cent (14.9 per cent), and energy and utilities to 11.6 per cent (8.9 per cent). Among geographies, revenues from the Americas registered a dip to 53 per cent (57.3 per cent), and from Japan to 1.1 per cent (1.5 per cent). However, the rest of the geographies registered growth, with Europe leading the pack with revenues growing 28.6 per cent (25.4 per cent), and APAC and other emerging markets to 8.3 per cent (6.8 per cent). The contribution of India and West Asia businesses stood steady at 9 per cent.

Mr T.K. Kurien, Executive Director and Chief Executive Officer, IT Business, said, “We are seeing three mega themes — consumerisation of IT, the variabilisation of IT and analytics in a constrained world.” For the quarter ending September 30, 2011, the company expects revenues to be in the range of $1,436-1,464 million from its IT services business.

“A muted second quarter guidance (is) obviously reflecting the cautious buyer sentiments but more so because of the fact that Wipro has been undergoing tremendous internal change and restructuring activities,” said Mr Arup Roy, Principal Research Analyst at Gartner.