Wipro net rises 16% to Rs 478 crore in Q2

Topline grows by 27% to Rs 2,506.80 crore.

Wipro Ltd has posted a robust 27 per cent topline growth to touch the Rs 2,506.8-crore mark for the second quarter ended September 2005 against what it achieved in the corresponding quarter of the previous year. Wipro's net profit grew by 16 per cent to reach Rs 478 crore for the same period.

Wipro Technologies, the flagship global information technology services arm of Wipro Ltd, has posted a 26 per cent growth to touch the Rs 1,894.8-crore mark against a guidance of Rs 1,857 crore.

Wipro Ltd said it expected Wipro Technologies' topline to be $463 million (approximately Rs 2,037 crore) for the third quarter of the current financial year. However, its BPO arm, which is being restructured, continues to lag behind, its PBIT falling by 37 per cent.

The company, which is into hardware, software, BPO, personal care products and lighting, today attributed its net profit of Rs 478 crore to a strong demand in the global outsourcing market and also to better utilisation of its existing resources.

The Wipro scrip, however, was down by 1.23 per cent to close at Rs 368.70 on the Bombay Stock Exchange amidst an overall 151-point drop in the Sensex.

Wipro Chairman Azim Premji said, "The quarter once again demonstrated the depth of our management and robustness of our processes as we smoothly managed organisational transitions to deliver a solid quarter. The global IT business sustained its momentum, recording a double-digit volume growth sequentially, generating $430.7 million in revenue for the quarter," he added.

He painted a positive picture by saying that the "broadbased results position us well to lead industry growth. Looking ahead, for the quarter ending December 2005, we expect revenue from our global IT services business to be approximately $463 million."

Wipro also said it would raise the salaries of its onsite employees by 12 per cent from November 2005. This, the company said, will have a 1.5 per cent impact on margins in the ensuing quarters, while the operating margins will be sustainable in a narrow range. Wipro is also planning a similar pay hike for offshore employees, effective from the fourth quarter.

Wipro Technologies reported Rs 1,894 crore of revenue for the second quarter of the current financial year, an increase of 26 per cent year-on-year. It also announced a PBIT of Rs 462 crore, an increase of 12 per cent year-on-year. This arm accounts for 76 per cent of Wipro's total revenue and 88 per cent of PBIT.

Said Suresh Senapathy, CFO, Wipro, "We saw robust sequential revenue growth in all our business units, with our financial solutions and technology businesses delivering sequential double-digit growth. Our differentiated services "" technology infrastructure and testing services "" posted a double-digit sequential growth as well."

"Wipro Technologies was able to expand operating margins despite a gross addition of 5,600 people in our IT services team and lower price realisations. In line with our expectations, our BPO business delivered improved profitability for the quarter," he said.

The BPO business would see flat revenue over the next three quarters before the effects of the revamp were felt, Senapathy added. The revamp will see non-voice based work growing at a fast pace, which is expected to account for 40 per cent of revenue against the current 16 per cent in a year's time.

Said Premji, "This figure may be over-ambitious, but that is the direction we are heading towards. We want our BPO services to be strong coupled with the IT services offerings."

Wipro's BPO business posted a 10 per cent growth in topline to touch the Rs 181-crore mark for the second quarter of 2005-06 and had operating margins of 13 per cent, down from 22 per cent recorded in the corresponding quarter of the previous year.

Wipro BPO is also setting up a near-shore centre in Romania and this new unit is expected to expand among other things Wipro's language capabilities for voice and transaction processing.

Wipro Infotech, the arm which focuses on India and the Asia-Pacific region with IT services and products has posted a good 32 per cent year-on-year growth at Rs 398 crore and PBIT of Rs 29 crore.

Said Suresh Vaswani, head, Wipro Infotech, "We accounted for 16 per cent of revenue and 6 per cent of PBIT with the services business contributing 36 per cent. We won two outsourcing long-term projects this quarter, besides a host of contracts."

Wipro is currently sitting on a cash pile of Rs 3,152 crore with the number of employees being close to 46,000. The company's consumer care and lighting business recorded revenue of Rs 143 crore with PBIT of Rs 19 crore, a year-on-year increase of 24 per cent and 17 per cent, respectively. PBIT to revenue was 13.6 per cent for the quarter.