Wipro Q4 profit up 41%, gives weak June quarter forecast - Livemint

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Bangalore: India's third-largest software services exporter Wipro Ltd issued a weak revenue growth forecast for the June quarter after posting a 41% rise in fourth-quarter profit to beat market estimates, driven mainly by a pick-up in client spending during a seasonally soft quarter.

Wipro forecast revenue of between $1.715 billion and $1.755 billion for the June quarter, a period when Indian outsourcing firms typically witness an increase in technology spending by companies. The guidance indicates a range of marginally negative to 2% sequential growth in revenue.

Wipro is the only company to provide quarterly guidance among the top 5 software services firms.

Net profit at Rs.2,227 crore jumped 41% from Rs.1,576 crore a year ago. Revenue jumped 22% to Rs.11,704.5 crore.

Indian IT firms have gained from the currency depreciation as they generate most of their revenues in dollars.

Analysts, on average, were expecting Wipro to post a net profit of Rs.2,102 crore on revenue of Rs.11,643 crore, according to a Bloomberg poll of 38 analysts.

In dollar terms, the currency in which it generates most of its revenues, Wipro posted a net profit of $434 million on revenue of $1.72 billion, an increase of 8.5% from last year. The company had forecast its March quarter revenue between $1.71 billion and $1.75 billion after their December quarter results.

"The steady improvement in global economy, coupled with the exciting pace of technological advancements, presents us with opportunities to create innovative solutions to help our customers differentiate, compete and succeed in their respective markets," Wipro's billionaire chairman Azim Premji said in a statement on Thursday.

With the latest quarterly performance, Wipro joins rivals Tata Consultancy Services Ltd (TCS) and HCL Technologies in posting a healthy performance during this quarter, but their guidance will worry investors who are impatiently waiting for a turnaround in fortunes.

Analysts, on average, were expecting Wipro to forecast sequential revenue growth of at least 2-4%.

While both TCS and HCL Technologies posted numbers that beat analysts' expectations and forecast strong growth in the current fiscal, Infosys Ltd posted in-line revenue growth on Tuesday and forecast revenue growth for fiscal 2015, below average industry growth.

Software lobby body Nasscom expects software export revenues to grow 13-15% this fiscal.

Over the past five years, Wipro has lost significant market share to faster-growing rivals such as TCS, US-based Cognizant Technology Solutions Corp. and HCL Technologies, prompting the company to ditch its dual-CEO model and hire T.K. Kurien to lead a turnaround in its fortunes.

Over the past two years, Wipro has undertaken a massive organizational overhaul under chief executive Kurien who collapsed complex organizational structures to create a nimbler organization and de-centralized decision-making by handing more powers to second-tier leaders to help them take quicker and bolder decisions in the company's quest for reviving growth.

However, Wipro still continues to lag other top-tier rivals in terms of growth, barring its energy and utilities business and failed to capture crucial market share in the banking and financial services sector, which contributes about 30-40% of the total revenue of India's $118-billion information technology (IT) sector.

Since April last year, Wipro has been trading as a standalone IT stock, having hived off its non-IT businesses.

Wipro's results were declared after market hours on Thursday. Its shares ended 2.4% higher at Rs.585.55 a piece on BSE while the TCS stock closed at Rs.2,217.45 up 1.02%; Infosys was up 1.06% at Rs.3,189.9 and HCL Tech also rose 1.06% to Rs.1,424.30.

The benchmark BSE Sensex was up 1.58% to 22,628.84 points while the BSE IT index rose 1.21% to 8,907.19 points.

In the March quarter, TCS fell 1.97% while Wipro Ltd fell 2.94%, Infosys Ltd fell 5.93%, HCL Tech rose 10.09%. The BSE Sensex rose 5.74% while the BSE IT Index fell 3.22%.

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