IT outsourcer Wipro reported its highest quarterly revenue growth giving enough indications that it was on its way to a stable future with discretionary spending from its US clients bouncing back.
The results which beat analysts’ forecast but lagged its peers saw net profit grow 28 per cent to Rs 1,932 crore on a year-on-year basis on the back of a 19 per cent increase in revenues to Rs 10,992 crore in the July-September quarter this fiscal.
Ups revenue forecast
The company has guided for a better quarter and projected revenues in the range of $1.66-1.69 billion in the third quarter, which translates to a growth of between 5.25 per cent and 7.15 per cent annually.
Wipro believes that it will be in a better position to take on its peers starting from the 2014 fiscal. It said growth in this quarter was aided by foreign exchange gain and operational efficiency, a trend that has played out with other software service majors.
“Third quarter guidance is marginally better than expectations and the company’s focus on mining existing clients and winning large deals seems to be yielding results,” said Dipen Shah, Head of Private Client Group Research, Kotak Securities.
IT services grow 20%
Revenues from the IT services grew 20 per cent year-on-year to Rs 10,068 crore ($1.6 billion) while earnings before interest and tax was Rs 2,264 crore ($362 million), posting an increase of 31 per cent during the same period. Operating margins were up 22.5 per cent which was an improvement of 180 basis points over the same period last year and margins during the quarter were the highest in the last five quarters.
Attrition rates were up from 13.2 per cent to 13.5 per cent with its total employee base at 1,47,216. “There are positive indicators on the global economy. Client confidence is on the uptick and we see it reflected in our results,” Wipro Chairman, Azim Premji said.
The company’s Executive Director and CEO, T.K. Kurien, said Wipro was able to achieve broad-based revenue growth across all industry verticals.
In the second quarter, the company closed multi-year deals in banking and financial services, healthcare and media and telecom verticals. Further, the company expects a pick-up in momentum for outsourcing services, which will drive growth for other Indian IT services companies.
Healthcare increases
Healthcare grew the highest at 5.5 per cent on a quarter-on-quarter basis while revenues from APAC and emerging economies rose 6.3 per cent, the US grew 2.9 per cent and Europe 2.3 per cent.