Upbeat Wipro sees a better second quarter

Our Bureau | | Updated on: Nov 24, 2017






Banks on rising business confidence in developed markets

IT services company Wipro Ltd reported another good quarter, meeting market expectations, and gave a positive estimate for the fiscal second quarter.

India’s third largest software exporter posted a net profit of ₹2,067.2 crore in the first quarter of FY15, a 54.5 per cent growth over the corresponding period last year, according to a filing with the BSE. However, on a sequential basis, the net profit went down by 2 per cent because of annual wage hikes of 13.8 per cent, according to company officials.

Revenue grew 15 per cent year-on-year to ₹10,104 crore. On Thursday, the Wipro stock closed at ₹576.80 on BSE, up 1.31 per cent from the previous close.

The company, which has secured a number of multi-million dollar deals, has given out a second quarter guidance in the range of $1.77-1.81 billion.

Wipro does not give out an annual guidance like competitor Infosys does, but at the end of the fourth quarter of 2014 fiscal, it had given a guidance of $1.71-1.75 billion for the June quarter, which indicated a contraction of 0.3–2.02 per cent.

Improved demand Addressing reporters, CEO TK Kurien said the improved demand for outsourcing services has helped the company perform well.

North America is seeing a return to discretionary spending and continental Europe continues to be “hot”, something that rivals such as Tata Consultancy Services have also maintained, Kurien added.

Chairman Azim Premji in a statement said the company continues to see significant rise in business confidence in developed markets and in India.

For the quarter, growth came mainly from healthcare and life-sciences. Revenue from that vertical grew 20 per cent on an annual basis.

The company also improved its employee utilisation by 1.03 percentage points or 77.9 per cent, but still lags behind its rivals, with TCS having a utilisation in excess of 80 per cent.

Thumbs up from analysts Analysts gave their thumbs up for the result and according to Dipen Shah, Head- Private Client Group Research, Kotak Securities, large deals in the IT infrastructure management vertical should lead to better revenue growth in the future quarters. However, attrition continues to be a problem area and for the quarter, the company saw attrition of 16.1 per cent, a whole percentage point when compared to the previous quarter.

Head of HR Saurabh Govil feels attrition in the three-five years bucket is not that much of a concern.

In the first quarter, the company saw its earnings before interest, and tax (EBIT) grew 35 per cent on a year-on-year basis.

Published on July 24, 2014
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