Wipro on Thursday announced a 29.5 per cent growth in consolidated net profit for April-June period, helped by large deals in application and infrastructure space as well as return of discretionary spending in the North American market.
Bangalore-headquartered firm had posted a net profit of Rs 1,623.3 crore in the year-ago period, it said in a BSE filing.
Consolidated net sales of the country’s third largest IT services firm rose 15.5 per cent to Rs 11,245.5 crore in April-June quarter this fiscal from Rs 9,733.2 crore in the same quarter of 2013-14. Figures are in IFRS.
Wipro Chairman Azim Premji said: “We see a significant rise in business confidence in developed markets as well as India.”
The new Government at the Centre has brought about hope and confidence in the minds of all stakeholders through reform pronouncements with fiscal prudence, he added.
In US dollars, Wipro reported a net profit of $351 million and revenue of $1.9 billion.
Revenue from IT Services stood at $1.74 billion, a quarter-on-quarter increase of 1.2 per cent and year-on-year increase of 9.6 per cent. Wipro had guided this to be in the range of $1.715 billion-$1.755 billion.
For the July-September quarter, the IT services revenue is forecast to be in the range of $1.77 billion-$1.81 billion.
“We continue to win large deals particularly in the application and infrastructure space. We recently announced our largest ever total outsourcing deal,” Wipro CEO TK Kurien said.
Speaking to reporters in Bangalore after the result announcements, Kurien said Wipro had a quarter-on-quarter revenue growth of 1.2 per cent, which was in line with the guidance.
On the demand environment, he said: “Demand continues to hold steady. In North America, we see return of discretionary spending, while Continental Europe continues to have significant potential for outsourcing IT services.”
“We see strong demand in healthcare and life sciences which grew 20 per cent y-o-y in revenue this quarter. Business momentum is improving in manufacturing & hi-tech, while we challenges in retail,” Kurien said.
On service lines, global infrastructure services continue to score good wins with a sequential growth of 5 per cent. The business in India and Middle East also witnessed good growth.
Analysts said the April-June quarter has been lukewarm for the country’s third largest IT services firm.
“Its been a lukewarm period overall for IT industry at large, including Wipro. That said, few contracts over the last quarter has helped Wipro get access to more high-profile deals at a time when outsourcing demand looks stronger compared to previous years,” Greyhound Research CEO Sanchit Vir Gogia said.
Wipro shares today closed higher by 1.31 per cent at Rs 576.80 apiece at the BSE.IT Services revenue in rupee terms was Rs 10,510 crore, anincrease of 18 per cent year-on-year.
The IT services segment had 147,452 employees as of June 30, 2014 and the firm added 35 new customers for the quarter.
“We continue to drive operational efficiency and invest in our strategy. Operating margins for the quarter was on expected lines, impacted largely due to wage hikes,” Wipro CFO Suresh Senapaty said.
The decline in profit and margins is mainly due to the wage hikes, he added.
“We gave average eight per cent wage hikes to offshore employees and two per cent to onsite employees. About 80-90 per cent of the decline in profits and margins is due to the wage hikes,” Senapaty added.