Wipro on Friday posted a mere 1.7% sequential dollar revenue growth for the second quarter ended September, failing to break its spell of slow run seen over the last one year. It, however, beat market expectations in terms of quarterly net profit for the period, while forecasting muted growth for the December quarter.
For the third quarter ending December, the Azim Premji-led firm projected IT services revenues in the range of $1,560-$1,590 million, a growth of 1.1-3.1%. Analysts had expected a revenue growth guidance of 2-4%. The stock market did not seem particularly enthused, rising marginally by 0.98% to close at Rs 364.95 on the BSE.
For the July-September period, Wipro’s consolidated net profit rose to R1,611 crore from R1,580 crore, up 2% sequentially. Year-on-year profit was up 24%. Revenue growth during the quarter was almost flat, sequentially, reaching R10,657 crore from R10,653 crore. On a year-on-year basis it rose 17%.
Wipro showed an improvement on the pricing front with offsite price realisation up by 1.9% and offshore by 1.5%. But its 0.2% volume growth for the second quarter was below par, with rival Infosys posting a 3.6% growth.
IT services revenue, its flagship business, was up 23% year-on-year to R8,373 crore, while in dollar terms revenue was up 4.6% at $1,541. Sequentially, profit from IT services was down marginally by 0.74% to R1,731 crore from R1,744 crore in Q1. Y-o-y it was up 27%.
Wipro chairman Azim Premji pointed out that the company had a decent quarter, but not a great one. TK Kurien, CEO, IT business, said retail demand was coming back in the US. “We have delivered revenues in line with our guidance and are continuing to see consistent improvement in our engagement with customers and employees,” Kurien said. “In Q2 of next year we are likely to see growth coming back in the US,” he said, adding that whoever comes to power in that country, there is some likelihood of policy changes.
Suresh Senapaty, CFO, Wipro, said that they were able to realise higher pricing as larger number of their IT contracts were being delivered through outcome and fixed price models. Under these models, the IT company has had greater flexibility in deploying resources helping them in keeping costs down, he said.
The operating margins of Wipro’s IT services business also remained stable at 20.7% despite the impact of wage increase and currency movement. However, it is very unlikely that the company