Wipro Q1 net up 31% on outsourcing recovery-Earnings News-Earnings-News By Company-News-The Economic Times
Posted on July 25, 2010 by Atul
MUMBAI: Wipro delivered a thumping verdict for recovery in the outsourcing sector with a robust growth forecast and better-than-expected earnings for the first quarter to end-June as spending of clients on technology begins to swell.
The country’s third-biggest software services exporter said it expects revenues to rise between 4.1% and 6.1% in the next quarter on the back of increased spending by corporates that slashed budgets to the bone during the financial crisis.
Net profit in the first quarter grew 31% to Rs 1,319 crore on revenues of Rs 7,236 crore. Bangalore-based Wipro joins larger rivals Tata Consultancy Services and Infosys in handing out an upbeat outlook for the outsourcing industry, helping to erase some of the anxieties gnawing at it, including a sliding euro and rising wages.
Indeed, in the strongest statement made by an IT company chief yet on the demand environment, Wipro chairman Azim Premji said he does not foresee a double-dip recession.
“We are seeing traction; decision-making is on. We are now seeing reasonably sound indications that discretionary spending is back,” Mr Premji said. “We are not having any measure of concern.”
The soap-to-lighting company’s revenues from software services met expectations with a 14% rise to Rs 5,500 crore but the growth was softer than what TCS and Infosys reported earlier this month. Wipro’s revenues from IT products shot up 13% while those from consumer care and lighting were up 23%.
Wipro shares rose to Rs 433 before ending lower at Rs 412 on the Bombay Stock Exchange on Friday.
“While Wipro has a softer quarter versus TCS and Infosys in June, its 6.1% Q-on-Q revenue growth guidance for the September quarter makes amends, and indicates that demand is firmly on an uptrend,” brokerage CLSA said in a note.
“Note that Wipro has delivered around the top-end of its guidance for the last eight quarters,” CLSA added.
Wipro CFO Suresh Senapaty said the company was able to improve margins by 30 basis points sequentially because of operational improvements made in acquisitions and other efficiencies. That helped fend off cross-currency headwinds, a one-month impact of wage spikes and a higher percentage of onsite revenues.
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