Moneycontrol Bureau
Software services firm Wipro's second quarter (July-September) net profit declined nearly 1 percent sequentially (up 8 percent year-on-year) to Rs 2,098.3 crore dented by higher tax and finance expenses, and reconciling items. Profit in the previous quarter was Rs 2,118 crore.
IT services revenue in rupee terms grew by 4 percent quarter-on-quarter (up 8.5 percent on yearly basis) to Rs 10,923 crore during the quarter. IT services revenue (non-GAAP constant currency) in dollar terms climbed 1.8 percent sequentially (up 8.6 percent year-on-year) to USD 1,771.5 million, which was within the company's guidance range of USD 1,770 million to USD 1,810 million but lower than estimates of USD 1,783 million (according to the average of estimates of analysts polled by CNBC-TV18).
Wipro underperformed its peers in dollar revenue growth. TCS had reported 6.4 percent, Infosys 3.19 percent and HCL Technologies 1.9 percent growth in dollar revenue on sequential basis.
Wipro said it expects IT services revenue in the range of USD 1,808-1,842 million for October-December quarter of the current financial year 2014-15.
"Business leaders in the US continue to exhibit increased confidence on growth prospects. Clients are increasingly looking to drive business value from their technology investments," said Azim Premji, Chairman.
He sees positive sentiment in India with the confidence that the government is focused on driving an agenda of growth.
Earnings before interest and tax (EBIT) increased marginally to Rs 2,402.3 crore from Rs 2,400.3 crore on quarter-on-quarter basis but EBIT margin declined 84 basis points to 22 percent during the quarter from 22.84 percent in previous quarter, which came in lower than analysts' expectations of Rs 2,428.5 crore and 22.4 percent, respectively.
The company continued to build leadership position in infrastructure services and continued the momentum of deal wins, said Suresh Senapaty, executive director & chief financial officer. "We continued to drive productivity and improving operating levers even as the effect of salary hike on this quarter's operating margin was on expected lines," he added.
Wipro added 50 new clients during the quarter. Globally it won contracts from clients like CLK Enerji (Turkey’s largest electricity distribution and retail sales company), Philip Morris International, British Petroleum.
During the quarter, Wipro said it completed the transaction announced on July 18, 2014 with ATCO Limited and the financials of the entities taken over were consolidated from August 2014.
T K Kurien, executive director & chief executive officer sees good momentum in large deals. He expects H2FY15 (October-March) to be better than H1FY15. According to him, the current demand environment is better than last year.
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