The Hindu : Business : Wipro posts 25% rise in net

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Business

Wipro posts 25% rise in net

Special Correspondent

Expects $1.09 billion revenues from IT services in second quarter

Company to focus on media and telecom sectors
Gains in Q2 operating profit can offset forex losses

Photo: G. R. N. SOMASHEKAR

SHOWING RESILIENCE: Azim Premji (left), Chairman, and Suresh Vasvani, Joint CEO, Wipro, addressing a press conference in Bangalore on Friday. —

BANGALORE: Wipro has reported a 43 per cent rise in consolidated revenues at Rs. 5,967 crore and a 25 per cent increase in the profit after tax at Rs. 908 crore in the first quarter ended June 30. The quarter-on-quarter increase in earnings and profit after tax was 5 per cent and 3 per cent, respectively.

Margins on IT services were flat, with revenues in dollar terms of $1,067 million and a sequential earnings growth of 3.5 per cent.

Wipro Chairman Azim Premji told reporters here on Friday that “even with significant economic uncertainty, we have strong growth in differentiated service lines like testing and outsourcing, averaging 40 per cent. Our financial services and retail businesses income shows resilience.

“We remain cautious in the near term but expect revenues from IT services in the second quarter to be around $1,089 million.”

Explaining the outlook, Chief Financial Officer Suresh Senapaty said, “We could sustain margins in spite of restricted stock units grants. Rate utilisation and utilisation have improved sequentially; we have added 31 new customers with seven multi-year multi-million dollar deals.”

The second quarter guidance was based on new business opportunities in high growth sectors like media and telecom and embedded systems sought by clients in manufacturing and healthcare.

The forex losses could be offset by anticipated gains in the operating profit in the next quarter but uncertainty over business with financial services clients may remain, he said.

On market capitalisation, the readjustments now seen might lead to more stability by the end of the second quarter, he added.

Girish S. Paranjpe, Joint CEO (IT Business), said, “Slowdown in recruitment is partly due to efforts to improve productivity. As for impact of inflation on our earnings, there are cost constraints among some customers. But, the cost reduction model is different with focus on re-engineering and we have a 14 per cent increase in deals which help customers in this approach.”

Wipro’s geographical focus continued to shift with revenues from Europe growing 30 per cent and from the U.S. growing 36 per cent (year-on-year) and among its divisions, consumer care and lighting had a 98 per cent growth.

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