Wipro, India?s third-largest IT services exporter, posted a sequential decline of 6.1% in net profit for the June quarter but guided strongly for the second quarter, reflecting the growing buoyancy in the industry. The company posted a 11% profit growth year-on-year riding on the back of an improved outsourcing demand.
Wipro met market estimates with a 0.2% sequential growth in IT services revenue. At the end of the quarter, the IT major reported a revenue of $1,588 million as against $1,585 million in the previous quarter.
Commenting on the results, Wipro chairman Azim Premji said, ?We are seeing higher confidence among our clients on the backdrop of positive macroeconomic developments in the US.?
In rupee terms, Wipro reported a net profit of R1,623 crore for the first quarter which was a growth of 11% on year on year basis. The revenue for the period stood at R9,735 crore showing an annual growth of 5%. The financials of Wipro reflect the demerged business where the company separated the IT and non-IT business with the latter becoming an unlisted entity.
On the first quarter numbers, Wipro CEO TK Kurien said, ?We are seeing a pickup in large deal closures which has reflected in strong order book in the current quarter.?
For the second quarter of FY14, Wipro has provided a revenue guidance of $1,620-1,650 million translating into a growth rate of 2-4%. Kurien remarked that it was one of the highest guidance they have provided in the recent times.
Commenting on Wipro?s results, Ankita Somani, IT analyst, Angel Broking, said, ?The outlook at 2-4% is encouraging as we were expecting 1.5-3%. If they achieve that would be better than what they have done in the last several quarters. The first quarter?s growth is largely due to rupee deprecation.?
However, Sanjiv Hota of Sharekhan said, ?Wipro has always got challenges in terms of execution though the commentary has always been about outlook is improving and stable. We are still negative on Wipro.?
The results were announced after market hours. The Wipro scrip closed at R382.80 on the BSE on Friday showing a gain of 1.74%.
Wipro has always maintained that its revenues in the first quarter are traditionally weak and they see strong demand coming back in the second and third quarters.
Kurien said, ?We saw the Q1 to be soft due to delays in discretionary spending and seasonal weakness in India & West Asia business, we do see demand environment picking up Q1. We have seen a pick-up in deal closures in Q1 and we are hopeful that the momentum will continue in the coming quarters.?
The company saw a negative growth in most of the verticals other than other than energy, natural resources and utilities that grew by 3.7% sequentially and finance solutions, which grew by 0.8%. Other verticals like global media and telecom declined by 1.1%, manufacturing declined by 0.8%, healthcare by 2.3% whereas retail, consumer goods and transportation showed a negative growth of 0.4%. In terms of geographies, Asia Pacific and other emerging markets grew a robust 5.2% while Europe showed a 1.9% growth sequentially but the major market of Americas showed a decline of 0.7% while India and West Asian markets showed a negative growth of 6.7%.
At the end of Q1, the company?s head count stood at 1,47,281 that is a net addition of 1,469 people from that of the previous quarter, Q4 of FY13.
