Wipro net up 28.4%, stock zooms on higher guidance

Higher client spending and a windfall from currency depreciation helped India’s third largest software services exporter Wipro Ltd report 28.4 per cent increase in net profit after tax at Rs 1,932.1 crore during the second quarter of 2013-14 ending September 30.

The Bangalore-based IT major had posted Rs 1,504 crore in the corresponding period a year earlier.

Wipro Chairman Azim Premji said that many positive indicators like client confidence going on the uptick resulting in higher operating margins has reflected on the company’s positive results during the second quarter.

Consolidated revenues from the core IT services business increased 20 per cent year-on-year to Rs 10,068 crore during the second quarter ended September 30 from Rs 8,373 crore.

The company added 45 new clients in the second quarter. Business from the top 10 customers grew 4.1 per cent on a sequential basis over the previous quarter ending June 30, 2013, with the top 125 clients growing 3.6 per cent.

Wipro’s Executive Director and Chief Executive Officer T K Kurien said, “We achieved broadbased revenue growth across all industry verticals and continue to focus on executing our strategy.”

He said that account management will continue to be a key focus for the company with digital transformation being a key priority at the customer front-end. He said that Wipro has integrated its capabilities from consulting, applications and analytics to enable its end-users to identify, sell and service through a connected experience across multiple touchpoints. “We are also seeing strong traction in leveraging open souce platforms which are going increasingly mainstream,” Kurien added.

Wipro’s consolidated revenues in the July-September quarter this fiscal rose by 19 per cent to Rs 11,331.9 crore from Rs 9,528 crore in the same quarter of 2012-13 fiscal.
In dollar terms, net profit stood at $309 million in the second quarter this fiscal, while consolidated revenues were at $1.76 billion during the quarter.

“Last quarter, I had mentioned that we are seeing improvement in spending and momentum in deal closures. Over the (second) quarter, we saw that discretionary spends continued to show steady pick-up and our deal conversion rates have gone up,” Kurien said.

The company crossed Rs 10,000 crore in revenues for the first time in a quarter with operating margins at 22.5 points improving 180 basis points over the same quarter a year ago. Operating cash flow stood at 89 per cent of the net income at the end of the second quarter, Wipro Chief Financial Officer Suresh Senapaty said.

Wipro had 1.47 lakh employees on its rolls at the end of the quarter. Senapaty said that the company’s strategy has started delivering results both on the front-end and on the execution front. He noted that currency depreciation benefits during the quarter had helped the company offset the impact of wage hikes, which positively impacted its operating margins.

The company projected revenues in the $1.66-$1.69 billion range for the third quarter ending December 31, 2013. The market responded heartily to the higher dollar guidance, with the stock rising 1.67 per cent to close at Rs 514.90 on the Bombay Stock Exchange on Tuesday.