Financial Daily from THE HINDU group of publications
Saturday, Jul 23, 2005
Financial Daily from THE HINDU group of publications Saturday, Jul 23, 2005 |
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Financial Performance Corporate Results - Software Info-Tech - Financial Performance Wipro Q1 net rises 20 pc at Rs 428 cr, revenues up 28 pc — `Global IT business continued to sustain momentum' Our Bureau
LOOKING FOR HIGHER GROWTH: Mr Azim Premji, Chairman, Wipro, and Mr Sudip Banerjee, President, Enterprise Solutions, announcing the first quarter results at a press conference in Bangalore on Friday. - G.R.N. Somashekar
Bangalore , July 22 STRONG rupee, high sales, marketing and visa costs, and a muted growth in its business process outsourcing (BPO) outfit impacted Wipro Ltd's first quarter earnings that fell short of expectations marginally. Wipro reported a 20 per cent growth in net profits at Rs 428 crore on revenues of Rs 2,261.9 crore that grew 28 per cent over last year's corresponding quarter net of Rs 359 crore and revenues of Rs 1,769 crore. However, sequentially the net profits and revenues declined by 1.16 per cent and 2.2 per cent respectively. "Our Global IT business continued to sustain momentum. The IT services component of the business witnessed strong volume growth and improved price realisations during the quarter," said Mr Azim Premji, Chairman, Wipro, in a press conference. The Wipro stock ended Friday about half a percentage point higher at Rs 714.95 on the BSE. "Looking ahead, for the September quarter, we expect revenues from our global IT business to be approximately $422 million, a sequential growth of 5.8 per cent," Mr Premji added. Wipro Technologies surpassed guidance to grow by 29 per cent to Rs 1,731.8 crore during the quarter over previous year, while the sequential revenue growth was 6.4 per cent. The Chief Financial Officer, Mr Suresh Senapaty, said a volume growth of 6.1 per cent and a 1.5 per cent improvement in price realisation were offset by a strong rupee and increased sales, marketing and visa costs, that resulted in a 1.5 percentage point shrinkage of operating margins, which stood at 24 per cent during the quarter. The offshore price realisation improved by 2.2 per cent while the onsite was up by 1.5 per cent. The currency fluctuation had a 50 basis points impact on the operating margins, while the increased visa fees impacted by 30 basis points, Mr Senapaty said. The fall in operating margins was around three percentage points when compared to last year's June quarter's 27 per cent. "We expect the operating margins to remain in a narrow band going forward," Mr Senapaty said. Wipro saw good sequential growth in its finance solutions, testing and technology infrastructure and enterprise application services business. European operations continued to lead the growth, Mr Senapaty said. Key wins included a £25-million deal from Northern Gas Networks among others. Wipro saw the highest net addition of 2,000 employees to its IT services business, while an equal number of its BPO employees were reduced during the quarter. Wipro BPO is currently realigning its operational focus with a tilt towards transaction processing. Wipro Infotech, the India and Asia Pacific IT services arm, saw a revenue growth of 25 per cent at Rs 338 crore over the previous quarter, while consumer care and lighting business also grew by 30 per cent at Rs 136.4 crore.
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