Healthcare, retail and utilities are the new big growth drivers for IT giant Wipro Ltd as they are the only verticals which have seen significant growth last fiscal.
The company had seven clients with more than $100 million across sectors such as energy, healthcare, retail and BFSI in FY12 compared with three in FY11. Currently, all the four sectors contribute 65 per cent of the company's revenues, which is about 10 percentage points higher than the previous year.
“The company won three large deals in BFSI last year. This coupled with a delivery team of 30,000 and 2,500 industry experts employed by Wipro, gives them an edge over competitors,” said Mr Ashish Chopra, analyst at Motilal Oswal.
Similarly, healthcare is another growth area for Wipro that saw a big win from pharmaceutical major Astra Zeneca in December last year. Also, recently the company launched its NextGen Care Management solution, which is targeted at the US healthcare market, pegged at $24 billion. “Apart from the above mentioned sectors, we see growth in social media, analytics, mobility and cloud going ahead,” Mr K.R. Sanjiv, Global Head and Senior Vice-President for Analytics, Wipro, told
Wipro has been under pressure in the last fiscal from competitors TCS and Cognizant who are outperforming it in profitability. The company reported an increase of 5.2 per cent in its net profit to Rs 5,573 crore against Rs 5,297.7 crore in the 2011 fiscal.
This is lower compared to competitor Infosys, which posted 27.4 per cent growth in net profits. However, analysts feel that Wipro has better profitability going ahead.
“EBITDA margins are expected to move up from 19.8 per cent in FY2012 to 20.5 per cent in FY2014, according to our estimates,” said Ms Ankita Somani, analyst at Angel Broking. As per our FY2012-14 estimates, Wipro's net profit is expected to post a CAGR of 15.2 per cent, which is industry leading, she added. Wipro, as a policy does not give out guidance for the fiscal year.
However, analysts cautioned that delay in outsourcing decisions by Wipro's customers and ongoing internal workforce alignment need to be monitored for this predicted growth in profitability.