Wipro Q1 in line; bets on healthy demand

Wipro, India's third-largest IT services company, on Thursday posted a profit of Rs 2,118 crore that was largely in line with expectations for the June 2014 quarter, but the surprise came from a stronger guidance for its IT services business on the back of healthy order booking and demand from key geographies.

The Bangalore-based company's net profit of Rs 2,118 crore in the quarter ended June 30, 2014 was up 30 per cent over the corresponding period last year, while the revenues increased 14 per cent on a year-on-year (y-o-y) basis to Rs 11,136 crore. Consensus Bloomberg estimates had pegged its net profit and revenues at Rs 2,125 crore and Rs 11,335 crore, respectively.

The revenues of the company's IT services business saw a growth of 18 per cent, y-o-y, at Rs 10,508 crore whereas the operating profit at Rs 2,400 crore grew 31 per cent y-o-y.

Even as this was the fourth consecutive quarter of growth in line with expectations for Wipro, chief executive officer T K Kurien said: 'It is still work-in-progress."

"We continue to win large deals particularly in the application and infrastructure space. We recently announced our largest-ever total outsourcing deal," said Kurien, adding: "But I think it is too early to declare victory. We have to hit a sequential growth rate of four per cent, and when we hit that, we will say that the job is done. But till then, I would say that there is a lot of merit in being paranoid, because that helps you perform better." In dollar terms, Wipro's IT services revenue was close to the upper end of its guidance, at $1,740.2 million, a sequential increase of 1.2 per cent. For Q1 of FY15, Wipro had guided its IT services revenues to be between $1.71 billion and $1.75 billion, a sequential decline of 0.3 per cent to an increase of two per cent.

For the quarter ending September 30, 2014 (Q2 of FY15), the company said it expects IT services revenues to be in the range of $1,770 million to $1,810 million, implying a growth of 1.7 per cent to 4 per cent, on a sequential basis. This is amongst the best guidance by the company in several quarters.

"We see a significant rise in business confidence in developed markets as well as India. The new government at the Centre has brought about hope and confidence in the minds of all stakeholders through reform pronouncements with fiscal prudence," said Azim Premji, chairman of Wipro.