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Wipro Q1 net up 3%; guides for $1.62-1.65b Q2 rev growth

The Bangalore-based company said wage hikes effective June impacted its operating margins in Q1. It is confident of the year ahead and said it is seeing higher confidence among clients and a pickup in large deal closures.

July 27, 2013 / 11:43 AM IST
 
 
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Wipro, India's third largest software services exporter, reported a 11 percent year-on-year (3 percent sequentially) growth in first quarter net profit from its continuing operations (IT business) at Rs 1,623 crore, and signalled things were looking up going ahead.


Revenue increased 5 percent from a year ago to Rs 9,735 crore in the April-June quarter.


The company had demerged its FMCG and lighting operations into a seperate company and the results now only include earnings from IT services and IT products segments.


Analysts on an average had expected the IT company to report net profit of Rs 1,640 crore, on revenues of Rs 9,917 crore, according to a CNBC-TV18 poll.


Wipro's first quarter IT services revenue was up 7 percent from a year ago to Rs 8,936 crore. In US Dollar terms, IT services revenue increased 0.2 percent sequentially (5 percent year-on-year) to USD 1.59 billion.


Its EBIT (earnings before interest, taxes) in April-June came in at Rs 1,785 crore, lower than analysts expectation of Rs 1,827 crore and margin was at 20 percent, compared with 20.4 percent, the street had expected.


"We have given wage hikes for both onsite and offshore employees effective June 2013, which has impacted our operating margins in the quarter," said Suresh Senapaty, CFO.


Apart from the wage hikes, foreign exchange volatility also hurt margins, Wipro said. The cross-currency impact was close to USD 16 million, 1 percent of revenue.


Earlier this month, Tata Consultancy Services beat street estimates with a 16 percent year-on-year rise in Q1 net profit at Rs 3,831 crore. Infosys' first quarter net profit rose 4 percent from a year ago, also ahead of expectations, at Rs 2,374 crore.


GUIDANCE


Despite the below par operating performance in the quarter, the company is confident of the times ahead.


Wipro has guided for IT services revenue to be in the range of USD 1.62-1.65 billion in the second quarter.


"We are seeing higher confidence among our clients on the backdrop of positive macroeconomic developments, particularly in the US," said Azim Premji, chairman.


The company added 28 new customers in the quarter and employee strength in the IT services business increased by 1,469 people to over 1.47 lakh opeople.


"We are seeing a pickup in large deal closures, which has reflected in strong order book in the current quarter," TK Kurien, CEO said.


Some of the new deals included a multi-year, multi-million dollar contract from an Asia Pacific-based telecom service provider to enable big data based analytics solutions to enable business transformation, a multi-year deal in the infrastructure management space from a large global bank and a multi-year contract from one of UK's largest providers of life and general insurance.

Wipro shares closed at Rs 381.95 on NSE on Friday, up 1.5 percent. The earnings were announced after market closed.

first published: Jul 26, 2013 05:00 pm
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