Wipro upbeat on growth in IT services business

Bangalore, Jan 18 (IANS) Indian IT bellwether Wipro Ltd is upbeat on sustaining growth momentum in its flagship global IT services business, as evident from its higher revenue forecast for fourth quarter (Jan-March) of this fiscal (2012-13).

Having met its revenue guidance for third quarter (Oct-Dec) with $1.58 billion, the global software major Friday said its IT services business would grow in the range of $1,585-1,625 million or sequentially 1.8 percent to $1.61 billion ($1,605 million) in fourth quarter (Q4) under the International Financial Reporting Standard (IFRS) and by two percent in rupee terms to Rs.8,781 crore (Rs.87.81 billion).

In a regulatory filing earlier, the company said it posted net profit of Rs.1,716 crore (Rs.17.16 billion) for third quarter, registering 18 percent year-on-year (YoY) and 6.5 percent sequentially.

Total revenue, however, increased only 10 percent YoY and 3.5 percent sequentially to Rs.11,025 crore (Rs.110 billion), as per the Indian accounting standard.

Under the IFRS, net income is $313 million, three percent up sequentially, and gross revenue $2 billion, which is 10 percent higher YoY but flat sequentially.

The company's IT services business grew 4.8 percent YoY and 2.4 percent sequentially to $1,577 million ($1.58 billion) under IFRS and accounted for 78 percent of total revenue and 92 percent of operating income.

In rupee terms, IT services business grew 13 percent YoY and 2.7 percent sequentially to Rs.8,602 crore (Rs.86 billion) and earnings before interest and tax (ebit) is also 13 percent up YoY to Rs,1,792 crore (Rs.17.92 billion/$327 million).

"While the overall mood on economic growth continues to be muted, global corporations continue to leverage technology to drive revenues and productivity," Wipro chairman Azim Premji said in a statement on the occasion.

Operating margin for IT services was 21 percent for quarter under review, which remains flat YoY and sequentially.

"We have seen broad based growth in the quarter with all our verticals growing sequentially. Our improvement in customer engagement is reflected in client mining with 10 customers contributing over $100 million and lower attrition," chief executive T.K. Kurien said in the statement.

IT services business added 50 customers during the quarter as against 53 quarter ago and 37 year ago, taking total number to 966 as against 939 quarter ago and 953 year ago.

Revenue from existing customers continued to remain high at 97.6 percent as against 98.5 percent quarter ago and 97.9 percent year ago.

"We have expanded operating margins sequentially to 20.8 percent from 20.7 percent through improvements in revenue productivity and cash flow generation with efficient working capital management," chief financial officer Suresh Senapaty said.

The IT services division added 2,336 people during the quarter under review (Q3), taking the total number of headcount to 142,905 people as against 140,569 quarter ago and 136,734 year ago.

"Though the overall demand environment has not changed much over the last three months, we see lot of momentum in certain areas of our business, while in other areas they continue to remain challenging," Senapaty added.

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