Wednesday, July 22, 2009

Wipro Q1 Up 12% To Rs 1015.5 Crore

. Wednesday, July 22, 2009

By stockOzone team

Client wins in new markets lifted India’s third biggest software exporter Wipro’s first-quarter by 11.78% to Rs 1015.5 crore, even as the company prepared to cope with lower IT spend among its top customers including Citigroup. Wipro said its revenues during the first quarter rose 5% to Rs 6,274 crore up from Rs 5,967 crore it reported a year before. ( Watch )

"We are starting to see the first signs of stability in the business as ramp-downs start to taper off and volumes start to stabilise," said Azim Premji, chairman of Wipro.

The company however provided a cautious and flat forecast for the quarter ending September 2009 -- similar to what peers TCS and Infosys provided -- reflecting lower demand for India’s $40-billion software export industry. "Looking ahead for the quarter ending September 30, 2009, we expect revenues from our IT services business to be in the range of $1,035 million to $1,053 million," he added.

A Reuters poll had forecast a net profit of Rs 914 billion crore for the New York-listed Wipro, which counts Citigroup, Cisco, General Motors, Nokia Siemens Networks and Credit Suiss among its clients.

In April, Wipro had said its software services revenues will fall to $1 billion-$1.03 billion in June quarter, down from around $1.05 billion the company reported for quarter ended March 2009. IT services revenues for Q1 to June, 2009, was $1.033 billion, a sequential decline of 1.3% and year-on-year decline of 3.3%.

The company also improved its operating margins from around 20.8% during quarter ended March 2009 to 22.3% during the first quarter ended June this year. The tech major though suffered a sequential fall in net sales from Rs 6482.1 crore posted in March 2009 while net profit remained almost flat against March levels of Rs 1,010 crore.

The company was also able to grow its revenues during the year because of its $127 million acquisition of Citi Technology Services, which will bring assured revenues of around $500 million over the next few years. "It was another quarter of strong performance. We improved on several operating parameters to deliver margin expansion of 0.65 to 22.3% in the IT services segment," says Suresh Senapaty, executive director and CFO of Wipro.

While the company’s IT services added 26 new clients during the quarter, the IT products division recorded a 2% year-on-year growth in revenues and 27% year-on-year growth in profit before interest and tax. Wipro Consumer Care and Lighting business revenue grew 7% year-on-year while PBIT was up 29% year-on-year. IT services revenues accounted for 77% of the revenue and 93% of PBIT for the first quarter.

Wipro counts a nine-year outsourcing deal with Unitech Wireless and a transformational deal with multi-brand speciality apparel retailer as its major deal wins in the first quarter. While it didn’t provide attrition figures, the firm had 98,521 people on its rolls as on June 30, 2009.

Wipro’s stock opened at Rs 455 on the Bombay Stock Exchange and zoomed to Rs 470 before settling down at rs 458 at 10.35 IST. The broader market was up 151 points.

Disclosure: Author does not own any of the stocks discussed here.

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