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Wipro appears to have made a steady move towards consistent performance by reporting improved financials for the second successive quarter.
Additions in large-size clients, healthy growth across key segments and geographies were key positives for the company during the December period.
Meets expectations The company managed to meet market expectations with a 2.9 per cent sequential growth in revenues in dollar terms during the quarter, which is in line with what TCS reported and better than the rate witnessed by Infosys, but behind HCL Technologies’ numbers.
Wipro’s earnings before interest and taxation (EBIT) grew by at a healthy pace at over six per cent sequentially. A healthy revenue guidance reiterated that its results are on a sustainable path.
Broad-based growth Some of Wipro’s large verticals such as finance solutions, energy and healthcare grew by 3.1-7.6 per cent sequentially in dollar terms, much faster than the overall company’s revenue rate. Other segments grew, albeit at a slower pace. These growth rates compare favourably with those managed HCL, Infosys and TCS in these verticals.
Revenues from its key geographies such as Americas, Europe and India grew at 3.2-5.5 per cent.
Growth was also witnessed by Wipro across its service lines led by its infrastructure, product engineering and BPO offerings.
This broad-based growth for all the IT majors clearly indicates that there may be a reasonable revival in outsourcing of projects by clients across the board, which bodes well for the IT industry. Even discretionary spends appear to have picked up at a reasonable pace.
New customers Wipro managed to add one customer each in the $100 million and $50 million categories and two new customers in the $20 million bucket, which again compares favourably with what its peers managed.
The company has guided for a robust 2-4 per cent growth in its revenues for the March quarter. If it manages to achieve the upper end of its guidance, it would certainly signal heightened competition across all the four top-tier IT players and not just between TCS and HCL. Going by the management commentary across IT players, 2014 may well turn out to be a fairly strong year given that there is anticipation of increased outsourcing, especially from Europe.
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