Comments
Wipro Ltd beat earnings estimate in the forth quarter of 2012-13, but projected a weak guidance for the first quarter of fiscal 2014 citing delay in closing outsourcing deals.
In its outlook for quarter ending June this fiscal, Wipro said revenues from its IT services are expected to be between $1.57 billion and $1.6 billion, indicating a decline of 0.6 per cent to a rise of 1.6 per cent over the previous quarter.
Wipro CFO Suresh C. Senapaty told Business Line that some of the discretionary spend kind of projects which got pushed out are expected to be closed in the current quarter. Therefore, the second quarter is expected to be better, he pointed out. Unlike Infosys, Wipro does not give yearly guidance.
The company reported a net profit of Rs 1,728.7 crore in the January-March quarter, a 17 per cent increase year-on-year. Total revenues were up 12 per cent (y-o-y) to Rs 11,026 crore for the quarter. IT services revenues for the quarter grew $1.58 billion, a 3.2 per cent increase year-on-year, though on a sequential basis the growth was flat.
Senapaty said the reduced profit margin was due to foreign exchange volatility especially with the British pound, which depreciated against the rupee.
“The cross currencies have been volatile and impacted our financial performance in the quarter but excluding the impact of foreign exchange, we have been able to maintain margins on a sequential basis,” Senapaty said.
According to Dipen Shah, Head of Private Client Group Research, Kotak Securities, “Wipro’s results were below estimates and the fall in average realisations was higher than estimates.” Other analysts shared similar views. A. Motilal Oswal report pointed out that volume of outsourcing work done by Wipro is uninspiring.
While market watchers are unhappy with the guidance, CEO of IT Services, T. K. Kurien, was confident that there will be a pick up in demand for outsourcing services in the second half of this year, a view expressed by TCS and HCL earlier this week. TCS on Wednesday reported profits that were roughly in line with estimates and said the company would grow faster than the industry in the current fiscal year.
Wipro declared a final dividend of Rs 5 a share, which totals to a dividend of Rs 7/share for the fiscal.
The company which has completed its de-merger that separates IT services and its other businesses such as consumer care, lighting, infrastructure, said that this focussed strategy would result in more business going forward.
“Being a pure play technology company would provide a fresh growth momentum,” said Azim Premji, Chairman, Wipro. He added that the company has no plans of listing the non-IT services businesses.
Hiring plans
On the hiring front, Wipro did not give out numbers on the number of employees it planned to hire in 2014 fiscal, but said 70 per cent of the total recruits will be from campuses. Further, for the whole year, attrition was at 13.7 per cent compared to 17.5 per cent last year, which according to company officials is a result of its in-house employee career enhancement programmes.
>venkatesh.ganesh@thehindu.co.in
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.