Sees over $1.1-billion revenue from IT services in the current financial year.
Backed by good volume growth in its flagship information technology (IT) export services, Wipro, the soaps-to-software company, posted a consolidated net profit (Indian GAAP) of Rs 1,217 crore for the third quarter ended December 31, 2009. This was 21 per cent higher than in the corresponding period of the previous financial year. The top line, too, moved up by 5 per cent, to Rs 6,966 crore.
The company, also India’s third-largest software services exporter, posted a 2 per cent year-on-year (YoY) growth rate in this key vertical to touch Rs 5,164 crore. It also moved further on a sequential (quarter-on-quarter, or QoQ) basis by 3.4 per cent, as the US financial sector looked for more cost-effective vendors to offshore work to countries like India.
Chairman Azim Premji said IT services will grow by 3-5 per cent in dollar terms during the fourth quarter on a sequential basis.
The New York Stock Exchange-listed company, which derives a majority of its revenues from the US market, posted 2.4 per cent growth in top line in US dollar terms to $1,126.8 million, also a good 5.8 per cent growth sequentially. The company’s operating profit for the information technology (IT) vertical at Rs 1,227 crore showed a growth of 17 per cent YoY.
The company witnessed a positive demand environment, which drove broad-based sequential growth across all its verticals, service lines and geographies. In 2010, the company expects IT budgets to be flat to marginally positive. For the quarter ending March 31, it expects revenues from its IT services’ business to be in the range of $1,161 million (nearly Rs 5,330 crore) to $1,183 million (over Rs 5,400 crore).
| WIPRO IN THIRD QUARTER |
| # IT services business crosses the 100,000-employee mark |
| # IT services business adds 31 new clients, as well as 4,855 employees (net) |
| # IT products business records 20% annual growth in revenue |
| # Wipro Consumer Care and Lighting business Revenue grows 14% annually |
Headcount at 100,000
Wipro Technologies, which brings in 74 per cent of Wipro’s revenues, added 31 new clients during the third quarter and added 4,855 employees (net), taking the total headcount to 100,000. In the quarter under review, Wipro’s BPO business contributed 10.6 per cent to IT revenue.
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Its biggest service, ADM (application, development and maintenance) accounted for 39.7 per cent of overall revenue. For Wipro, the technology, media & telecom vertical contributed the most (26.1 per cent) in the third quarter. It was followed by financial services (25.8 per cent), telecom (15.1 per cent), and retail & transportation (14.8 per cent).
Region-wise, the US contributed 57.1 per cent to revenue in the quarter, while Europe accounted for 26.3 per cent. Indian and West Asian business was 8.9 per cent.
Results in line
Analysts tracking Wipro said both the results and outlook were in line. “Wipro’s results are in line with what the industry has seen in this quarter. It indicates a recovery in demand and growth. Moreover, Tier-I companies will be riding the growth this year, while the smaller firms may not capture this growth this year,” said Nishant Verma, vice-president at advisory firm Tholons Capital.
However, despite buoyant results, Wipro’s stock fell 1.6 per cent and closed at Rs 725.40 on the Bombay Stock Exchange.
This, analysts explained, happens when there is a steep intra-day rise in stock prices and people take heavy positions. By the end of the day, they sell some of those positions. “This is the squaring-off of shares,” explained a market analyst who did not wish to be named.
| Revenue (in Rs cr) | Net profit (in Rs cr) | |||||||
| Q3’09 | Q3’10 | YoY (%) | QoQ (%) | Q3’09 | Q3’10 | YoY(%) | QoQ(%) | |
| TCS | 7,277 | 7,649 | 5.1 | 2.9 | 1,362 | 1,824 | 33.9 | 11.1 |
| Infosys | 5,786 | 5,741 | -0.8 | 2.8 | 1,641 | 1,582 | -3.6 | 2.7 |
| Wipro | 5,079 | 5,164 | 1.67 | 3.4 | **— | —-- | — | — |
| * Wipro’s revenue numbers refer to its IT services business ** Wipro does not give net profit numbers for its IT services business. Profit Before Interest & Tax (PBIT) for its IT services segment touched Rs 1,227 crore — a growth of 17% YoY (Consolidated Indian GAAP figures) | ||||||||
Volume uptick helps
Suresh Senapaty, executive director & chief financial officer at Wipro, attributed the good performance to a “significant uptick in volumes”. “We have maintained margins despite a decrease in our rate realisation and a strong appreciation of the rupee. Our Order Booking has been good and BFSI (banking, financial services and insurance) has bounced back strongly,” he said.
Other businesses shine, too
Wipro’s traditional consumer care and lighting business, which is taking on such established players as Hindustan Unilever in some pockets of India, posted a revenue growth of 14 per cent at Rs 600 crore, while its profit before interest and tax grew 21 per cent to Rs 74 crore.