Now it’s Wipro’s turn; posts 19% rise in Q3 net

After a stupendous performance from IT bellwether Infosys, it’s now the turn of India’s third-largest software house Wipro Ltd on Wednesday to continue with the knock for team Indian IT by beating all expectations and delivering more than it promised to spread the cheer around. Keeping up the second quarter momentum of sustained volume growth and stable prices and riding on telecom recovery and ability to close big deals, New York Stock Exchange-listed Wipro showed a 18.9 percent increase in net profit to Rs 274.30 crore on 37.27 percent growth in revenue of Rs 1,521.40 crore for the third quarter ended December 31, 2003. On a sequential basis, Wipro net profit increased by 19.1 percent while revenue went up by 10.6 percent.

However, in spite of a strong performance, the volatile markets ignored the scrip. On the BSE, Wipro shares closed at Rs 1,650.38, down Rs 63.95 or 3.73 percent, before touching an intra-day high of Rs 1,765. On the NSE, the scrip touched a high of Rs 1,760 before closing the day at Rs 1,656.90, down Rs 60.95 or 3.55 percent, against the previous day’s close. Having beaten the third quarter guidance of $241 million for global IT services by recording $250 million, Wipro expects a revenue from global IT services for quarter ending March 31, 2004, to be $269 million.

‘‘Business traction in our global IT service business continues to be robust. Improvement in productivity and increased cost efficiencies offset the impacts of offshore compensation increase, rupee appreciation and marginal decrease in utilisation, resulting in an expansion in our operating margin,’’ Wipro chairman Azim Premji told reporters.

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The IT services improved its operating margin by 1 percent and trimmed costs as a percentage of sales by 1.2 percent to push up margins, despite an offshore salary increase of 12 percent. However, the utilisation rate dropped by 1 percent, while the attrition rate went up 1 percent sequentially to 17 percent.

Wipro vice-chairman Vivek Paul said the attrition rates were higher among the junior employees, where the salary increase was not comparatively high. ‘‘In senior and middle management ranks, it (attrition) is a third less than the junior employees. It is an issue, but not a non-manageable issue,’’ he said.