Wipro beats analyst expectations, Q4 profit up 28.8%

Beating analyst expectations, Wipro on Thursday reported 28.8 per cent jump in net profit for the fourth quarter (Q4) to Rs 2,226.5 crore during the three months ended March 31 from Rs 1,728.7 crore in the corresponding period a year earlier.

Net sales grew 21.7 per cent to Rs 11,703.6 crore from Rs 9,613.1 crore a year earlier.

In anticipation of a strong deal pipeline in the first quarter of 2014-15, the company projected dollar revenues for the April-June period in the range of $1.72-$1.75 billion. The company said that growth and demand picking up in the key European and US markets and cost-cutting initiatives have helped it report a profit jump during the third quarter.

"The steady improvement in the global economy, coupled with the exciting pace of technological advancements, presents us with opportunities to create innovative solutions to help our customers differentiate, compete and succeed in their respective market," Wipro Chairman Azim Premji said while announcing the results.

Wipro improved its EBIT (Earnings before interest and tax) margins to 24.5 per cent as compared to 23 per cent in the previous quarter and 20 per cent in March 2013. The current quarter’s margins are the highest in the last 15 quarters. Analysts had expected EBIT margins to remain below the 23 per cent range. Company officials said that margins might be impacted by salary increments and promotions coming into effect from June 1, 2014.

For entire fiscal 2014, Wipro's profit rose 17.5 per cent to Rs 7,796.7 crore and revenues rose 16.1 per cent to Rs 43,754.9 crore.

Revenues from IT services during Q4 stood at Rs 10,620 crore, up 24 per cent year-on-year (YoY). IT services operating margins for 2013-14 expanded by 198 points thanks to operational improvements and cost-cutting measures, Wipro CFO Suresh Senapaty said.

In dollar terms, IT services revenues were $1.72 billion, up 8.5 per cent year-on-year and in line with its projection of $1.712-1.745 billion for January-March.

The company achieved sequential dollar revenue growth of 2.5 per cent for the quarter in line with its guidance. "Our investments in automation, platform-based delivery and process simplification have helped us expand our margins by 430 basis points year-on-year to 24.5 per cent. This is our highest margin in the last 15 quarters," Wipro Chief Executive Officer T K Kurien said.

Wipro added 59 customers during the quarter and had 1,46,053 employees on its rolls as of March 31 in its IT services business alone. "We saw strong deal closure in the current quarter with our order book being one of the highest we have ever seen and see the momentum continuing in the first quarter of this fiscal also; and, we have a strong funnel in terms of deals coming up for closure," Kurien said.

There is a seasonality with the firm's quarterly performance, which is playing out in the first quarter also, he added. "As we enter the year, we see broad demand trends remaining stable both in terms of volume and realisations," he said.

The company’s India and Middle East businesses was the fastest growing among all geographies on a sequential basis with 4.7 per cent growth over the previous quarter ended December 31, 2013.