Chairman Azim Premji sees improving demand environment for IT services.
Wipro Ltd, backed by an increase in price realisation, utilisation and fixed price contracts in its flagship IT services business, has posted a 19 per cent increase in net profit to Rs 1,162 crore for the second quarter ended September 30, 2009, compared with Rs 978.2 crore in the corresponding quarter last year.
The company’s top line rose 6 per cent to Rs 6,917 crore. On a sequential basis, the net has moved up 14 per cent, while the top line grew 10 per cent. IT services' division's revenues at Rs 4,995 crore was up 5 per cent year-on-year (y-o-y) and 4 per cent quarter-on-quarter (q-o-q). In US dollars, revenues at $1,065.2 million saw a sequential growth of 3.2 per cent and y-o-y decline of 4 per cent.
The company managed to meet estimates and has guided the street that revenues from IT services for the third quarter (October-December 2009) will grow 2.5 per cent. Its stock was up 2.18 per cent to close at Rs 604.15 on the BSE today. Azim Premji, chairman, Wipro, said they saw more stability in volumes and pricing as well as an improving demand environment for IT services, which accounted for 72 per cent of Wipro’s top line.
| CRUISING ALONG | |||||
| Q2 FY09 | Q2 FY10 | % change | Q1 FY10 | % change | |
| OVERALL BUSINESS | |||||
| Total income (Rs cr) | 6,507 | 6,917 | 6 | 6,273 | 10 |
| PBIT (Rs cr) | 1,105 | 1,302 | 18 | 1,159 | 12 |
| PAT (Rs cr) | 978 | 1,162 | 19 | 1,015 | 14 |
| Operating margin | 17% | 18.80% | - | 18.50% | - |
| IT services | |||||
| Total revenues (Rs cr) | 4,750 | 4,995 | 5 | 4,824 | 4 |
| PBIT (Rs cr) | 995 | 1,187 | 19 | 1,077 | 10 |
| Operating margin | 21% | 23.80% | - | 22.30% | - |
Backed by a 4 per cent price increase for its software services contracts and an 80 basis points increase in utilisation, operating profit for IT services grew 19 per cent to Rs 1,187 crore. Wipro’s IT business also had a dramatic increase in its fixed price contracts as it accounted for almost 41 per cent of its total contracts. During the corresponding period last year, the share of the fixed price contract was 32 per cent.
Suresh Senapaty, ED &CFO, Wipro, added operational improvements continued to pay dividend, resulting in double digit sequential growth in profit after tax. Margin in the IT services business was 23.8 per cent, an expansion of 143 basis points sequentially and 279 basis points y-o-y. The IT services business added 37 new clients and has close to 98,000 employees.