The country?s third-largest IT exporter, Wipro, has failed to maintain the upbeat earnings momentum set by its peers over the last one week. Even while meeting its revenue guidance, the company disappointed investors with a decline in volume growth and a subdued outlook for the fourth quarter, dragging its share down by 8% to R397 on the BSE on Friday.
During the October-December stretch, Wipro reported a decline in volume by 1% owing to lesser business in the non-discretionary spend, while rival Infosys had posted a 2% growth. The company on Friday recorded a 2.4% sequential dollar revenue growth for the third quarter, 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. For the fourth quarter ending March 31, the Azim Premji-led firm expects its IT services revenue to be in the range of $1,585-$1,625 million, a growth of 0.5-3%
?The expectations were set high by Infosys and TCS results. The turnaround time for the company is running out. For three consecutive quarters the company has a posted muted volume growth,? said Sanjeev Hota, of Sharekhan. After the better-than-expected results posted by peers, Wipro?s shares had gone up by 9% this year before Friday?s decline. ?The lower end of the guidance is also getting lower which is a matter of concern,? added Hota.
Wipro?s consolidated net profit rose to R1,716 crore from R1,611 crore, up 7% sequentially. Year-on-year profit was up 18%. Revenue growth during the quarter was 3% sequentially, reaching R11,025 crore from R10,657 crore. On a year-on-year basis it rose 10%. The company also announced an interim dividend of R2 per share.
During the period, Wipro recorded revenues of $1,577 million for its IT services business, which was in-line with market expectations, growing 4.8% y-o-y. Earlier for the third quarter, Wipro had projected IT services revenues in the range of $1,560-$1,590 million. In rupee terms, the IT business, that contributes about 78% to the company?s overall revenue, stood at R8,602 crore during the quarter, up 13% year-on-year. PBIT from IT services was R1,792 crore, an increase of 13% y-o-y.
Commenting on the company?s performance, chairman Azim Premji said, ?While the overall mood on economic growth continues to be muted, global corporations continue to leverage technology to drive revenues and productivity.?
For Wipro, the operating margin improved marginally by 0.1% over the last quarter to 20.8%.
The IT major showed an improvement on the pricing front as it went up by 1.4% during the quarter. It added 50 new customers in its IT services business and is looking at ways to mine deeper with customer accounts by forming a strong sales force, which is currently a team of 160. Wipro pointed out that in its IT services space it had 10 customers contributing more than $100 million in revenues during the December quarter.
While the company has reported less than 50% revenues from Americas with the growth slipping to -0.7%, Europe has contributed 29.6% with a good sequential growth rate of 7.5%. The company said while emerging economies will give good growth, volumes are still dependent on Europe and Americas.
Banking and financial services contributed 26.9% of the revenue, while manufacturing?s contribution was 18.7%. Retail and transportation, which grew 3% sequentially, contributed 18.1% of the company?s revenue. Global media and telecom contributed 14.3% while energy, natural resources and utilities contributed 15.1% of the company?s revenues.
Healthcare and life sciences, which witnessed a sequential growth of 7.1%, contributed 9.9% of the revenues. The service lines like business application services grew 4.7% while technology infrastructure services grew by 4.3%. Analytics grew by 12.7% y-o-y.
Wipro had a net addition of 2,336 people in the quarter, raising its total employee count to 14,2905 employees, while the voluntary attrition dropped by 1.5% to 12.9%.
