Wipro meets Q3 guidance, posts 27% rise in net

Wipro, India’s third largest IT services company on Friday met Street expectations by posting a strong growth in earnings for October-December 2013 (Q3), for the second quarter in a row, reaffirming belief that the company is back on the revival track. The country’s third largest IT services company’s consolidated net profit rose 27 per cent year-on-year to Rs 2,014.7 crore in Q3. The revenues at Rs 11,331.7 crore increased 18 per cent on year-on-year basis, aided by growth in top accounts and key geographies including the US and Europe. On a sequential quarter basis, the net profit grew by 4.28 per cent while the revenues grew 3 per cent. The sequential revenue growth clocked by Wipro was highest among its peers as sector leader reported sequential revenue growth of 1.5 per cent and HCL technologies 2.8 per cent. Infosys’s reported a sequential revenue growth of just 0.5 per cent. The financials during the quarter include its continuing operations – IT services and IT products business. However, Wipro has recently announced to discontinue its hardware manufacturing business. The company’s core IT services business reported a net profit of Rs 2,380 crore in the quarter, a growth of 33 per cent when compared with the same period last year. Revenues from IT services business increased 20 per cent to Rs 10,330 crore. In dollar terms, revenue from IT services grew 2.9 per cent sequentially in Q3 to $1.68 billion, at a mid-level of the company’s guidance of 1.8-3.6 per cent. The company guided for a 2-4 per cent growth in revenue from IT services during January-March 2013. The company said it was expecting its revenues from IT services business to be in the range of $1712 million to $1745 million, indicating a growth of between 2-3.96 per cent. “As the global economy is progressing towards stability, we see optimism amongst clients, especially in the west,” Chairman Azim Premji said. “Corporations are leveraging technology to reduce operational costs and investing resources in differentiating themselves in the market place.” The growth for the company in the December quarter was primarily led by healthcare and life sciences business that grew 7.6 per cent followed by energy, natural resources & utilities which grew 4.8 per cent on sequential quarter basis. Wipro also improved its margins in the IT services business by 54 basis points to 23 per cent in the quarter. Suresh Senapaty, CFO of the Bangalore based company said that the improvement in margins is a reflection of the drive the company has undertaken to improve efficiency.