Wipro quarter (Q1) profit up,shares downhttps://indianexpress.com/article/news-archive/web/wipro-quarter-q1-profit-up-shares-down/

Wipro quarter (Q1) profit up,shares down

Wipro reported rise in profit as customers outsourced more work to it to cut expenses.

Azim Premji-led Wipro Ltd,India’s No. 3 software services exporter,joined sector bellwether Infosys in giving a muted forecast for its main IT services business as global spending on outsourcing services slows,pushing Wipro’s shares down to a nine-month low.

The disappointing outlook from Wipro,controlled by billionaire Azim Premji,also renewed concerns about the Bangalore-based company’s ability to preserve market share despite undertaking a major management reshuffle last year.

Wipro said on Tuesday it expects September-quarter IT services revenue of $1.52 billion to $1.55 billion,a rise of 0.3 to 2.3 percent from the June quarter. Analysts were expecting Wipro to forecast a 2-4 percent increase.

The IT services unit,including back-office operations outsourcing,accounts for more than 75 percent of sales at the company that also makes soaps,light bulbs and hydraulics equipment.


The numbers look very bad…It looks like they are yet to be able to turn around their business despite all the restructuring,said Hardik Shah,an analyst at KR Choksey Shares and Securities.

The company last year named veteran T.K. Kurien as the chief executive of the IT services business in place of its joint CEOs to reverse its underperformance compared with larger rivals such as Tata Consultancy Services Ltd.

Kurien is also attempting to close the narrow lead U.S.-based Cognizant Technology Solutions Corp has established.

India’s $100 billion export-driven outsourcing sector is facing diminishing hopes of an early revival in demand as its biggest markets,the United States and Europe,grapple with changes in the economic and political climate.

Earlier this month,Infosys Ltd,the no. 2 software exporter,made a bigger-than-expected cut in its revenue growth forecast for the current fiscal year.

It’s pretty obvious that the volume growth is an issue for the sector,said Apurva Shah,head of investment research at BNP Paribas Mutual Fund,which manages about $750 million in investments,including large-cap Indian software companies.

I don’t think there will be any serious improvement in the next few quarters.


Consolidated net profit rose to 15.80 billion rupees ($282.55 million) for the fiscal first quarter ended June 30 from 13.35 billion rupees a year earlier for Wipro,which counts Citigroup Inc and Cisco systems Inc among its clients.

Analysts,on average,had forecast a net profit of 15.95 billion rupees.

Wipro,which is also listed in New York,said total revenue rose 24 percent to 106.53 billion rupees as the company added 37 clients in the quarter,including the Royal Philips Electronics.

The company’s IT services unit posted sales of $1.52 billion.

Wipro shares fell as much as 4.4 percent on Tuesday before erasing some of the losses to be down 3.3 percent at 344.70 rupees on the National Stock Exchange.

The shares,valued at about $16 billion,are down about 13 percent so far this year. In comparison,the broader Mumbai market has gained 9.2 percent,while the sector index is down 8.8 percent in 2012. ($1 = 55.9200 Indian rupees)

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Wipro Q1 net profit up 18.37 pc at Rs 1,580 cr

(PTI) Country’s third-largest software firm Wipro today posted 18.37 per cent rise in net profit for the April-June period of this fiscal but gave a muted guidance for the second quarter,pulling down its stock to 9-month low.

The company’s Q1 net profit was Rs 1,580.20 crore,as against against Rs 1,334.9 crore in the year-ago period.

However,a flat IT services revenue growth guidance of USD 1.52-1.55 billion for the July-September quarter pulled the company’s stock down by over 4 per cent to Rs 341 on the BSE. Later it recovered to Rs 346,but still down 3 per cent.

Wipro Chairman Azim Premji said that despite significant headwinds and volatile demand,revenues grew in all key geographies,and Europe – which is facing economic trouble – was more resilient than the prevailing sentiment there.

“We continue to see extensive engagement with customers in our new geos and projects,with Brazil looking especially promising,” Premji added.

Investors however were concerned with Wipro’s guidance on IT services revenues — 0.3-2.3 per cent sequential growth.

“The guidance looks decent (still lower than our estimate of 1-3 per cent (q-o-q) after continuous disappointments since last couple of quarters,” Angel Broking Research Analyst (IT) Ankita Somani said.

Wipro’s IT services revenue,which accounted for 78 per cent of the total revenues,grew 30 per cent year-on-year in rupee terms to Rs 8,314 crore in Q1.

However,in dollar terms it was impacted by USD 25 million of cross currency impact and was USD 1.51 billion,a year-on-year increase of eight per cent.

On constant currency basis,IT services revenue in dollar terms was within the company’s guidance of USD 1.54 billion.

“IT services business delivered sequential growth in line with our guidance,” Premji said.

Wipro’s total income from operations during the quarter rose 24.37 per cent to Rs 10,619.6 crore,from Rs 8,538.40 crore in the year-ago period.

The Indian IT industry is facing challenges in the US and European market given the uncertain economic climate.

Earlier this month,Infosys had slashed its revenue growth forecast for the current fiscal year,although TCS beat expectations with a 38 per cent rise in quarterly net profit.

“Customers continue to be focused on driving productivity and globalisation,” Premji said.

For the current quarter ending September 30,the company has maintained its revenue outlook to be in the same range,assuming that exchange rates of dollar will be at Rs 54.76.

“In today’s complex business environment,global corporations are increasingly investing in transformational technology initiatives to improve competitiveness.

“We see this shift as an opportunity for us to lead this change and help customers differentiate in this fast evolving market,” Premji said.

Wipro added 37 customers during the quarter. Of this one was USD 100 million client,taking the number of such clients to eight.

The company added one client in the USD 100 million plus revenue bracket which is a positive indication of company’s improving client mining capabilities.

Wipro added 2,632 people in its IT services segment during the year,taking the total headcount to 1,38,552 as of June 30,2012.

Revenues from the IT products segment recorded a five per cent decline year-on-year basis to Rs 953 crore (USD 172 million) for the quarter.


Americas contributed 51.6 per cent to the revenues,while Europe and Japan contributed 28.1 per cent and 1.3 per cent,respectively. India and Middle East accounted for 8.8 per cent to the revenues.

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