Oct. 27, 2009 (The Hindu Business Line) --
Bangalore, Oct. 27 Wipro Ltd (NYSE:WIT) beat its own as well as street estimates to report strong second quarter, aided by increased order flows, operational efficiencies and forex gains.
The company forecast a robust third quarter on anticipated strong volume expansion.
For the second quarter, net profit increased 19 per cent to Rs 1,162 crore, compared with Rs 978 crore in the year-ago period.
Sequentially, the profits grew 14.4 per cent.
Forex gains
Forex gains of Rs 24 crore due to the cross currency movement contributed to the company’s bottomline.
Wipro reported a 6-per cent revenue growth to Rs 6,917 crore over the year-ago period (10.2 per cent on a sequential basis).
Services biz strong
Revenues from IT services, which accounted for 72 per cent of total earnings, was $1,065.2 million — ahead of the company’s forecast of $1,035-$1,053 million.
The company expects IT services revenues for the December quarter to be in the range of $1,092 million to $1,113 million, primarily driven by volume growth. The upper end of the revenue forecast at $1,113 million is the highest ever in the company’s history.
Robust outlook from Wipro propelled the company share to an intra-day high of Rs 618 on the BSE.
The Wipro scrip gained 2.18 per cent to close at Rs 604.15 on Tuesday.
“The economic environment has stabilised, and going forward things are looking much better,” said Mr Azim Premji, Chairman of Wipro.
‘Pessimism is gone’
“There is more confidence and customers are back to decision-making. Although there isn’t huge amount of optimism in the market, the pessimism of the last 12 to 15 months has gone away,” he added.
Operating profit margins for the IT services business expanded 143 basis points sequentially to 23.8 per cent during the quarter.
“Higher percentage of revenue from fixed price projects, better utilisation rates and foreign exchange related gains pushed the margins up,” said Mr Suresh Senapaty, Chief Financial Officer, Wipro.
Revenue from fixed price projects was 40.3 per cent of the total earnings, compared with 38.4 per cent the previous quarter and 31.6 per cent in the year-ago period.
Gross utilisation increased 80 basis points to 70.8 per cent.
Better visibility
“The demand visibility has improved and pricing is stabilising,” said Mr Premji.
“The pipeline is the strongest we have ever seen in the recent times, and many more end-to-end deals are happening.”
Wipro, which saw broad-based growth across sectors and geographies, added 37 new customers during the quarter.
The number of active customers was 840, compared with 830 in the June quarter.
The IT products business, which accounts for 17 per cent of the company’s total business, grew 18 per cent to Rs 1183 crore.
Consumer care and lighting posted revenue of Rs 587 crore, a growth of 11 per cent annually.
Forced attrition in the global IT services business was 3.1 per cent, up from 1.9 per cent the previous quarter.
This resulted in a net decline in head-count of 630.
