Wipro net up 31 percent, ups IT revenue guidance

BANGALORE - Buoyed by double digit growth in net profit and total revenue during the first quarter (April-June), Wipro Ltd Friday projected higher revenue from its global IT services business for the second quarter (July-September) of this fiscal (2010-11).

India’s third largest IT bellwether said revenue from its IT services would be around $1.3 billion in the second quarter (Q2) as against $1.2 billion in the first quarter (Q1) of this fiscal, projecting a sequential growth of 5.1 percent (quarter-on-quarter).

“Our guidance for the second quarter reflects the strong demand environment across industry verticals as in the first quarter. We expect revenues from our IT services business to be in the range of $1,253-1,277 million) in the second quarter,” Wipro chairman Azim Premji said in a statement here.

The guidance is based on constant currency rate of the US dollar at Rs.45.68.

In a regulatory filing earlier, the global software major reported net profit of Rs.13.19 billion (Rs.1,319 crore) for the first quarter, registering 31 percent year-on-year (YoY) growth.

Similarly, total revenue for the quarter under review (Q1) grew 16.6 percent YoY to Rs.72.36 billion (Rs.7,236 crore).

Under the International Financial Reporting Standards (IFRS), net income for the quarter is $284 million and total revenue $1.56 billion.

Revenue from global IT services business also grew 16.6 percent YoY to $1.2 billion under IFRS and Rs.55 billion in rupee terms.

“We delivered as per our guidance in constant currency, with a sequential growth of 4.4 percent in the first quarter,” Wipro executive director & chief financial officer Suresh Senapaty said.

The quarter also saw a margin expansion of 30 basis points increase despite the head winds of wage increase and a decline in price realisation.

Sequential volume growth, margin expansion and decline in effective tax rate have contributed to a robust bottomline.

“We also benefited 60 basis points due to currency impact, as we have hedged $1.6 billion in a long range of $42-50,” Senapaty pointed out.

Earnings from IT services revenue before interest and tax (EBIT) grew 26 percent YoY to Rs.13.5 billion ($291 million).

“IT services business accounted for 76 percent of total revenue and 93 percent of operating income. Operating income to IT revenue is 25 percent,” Senapaty added.

IT services business added 22 new clients during the quarter as against 27 quarter ago and 26 year ago. As a result, total number of active customers increased to 858 from 845 quarter ago and 830 year ago.

Revenue from existing customers remained at 99.6 percent as against 99.5 percent year ago and 96.5 percent quarter ago.

“We had little impact of sovereign debt crisis in Europe, which accounted for 25.4 percent of IT services revenue as year ago (25.5 percent). Americas contributed 57.3 percent as against 59.7 percent year ago,” Senapaty added.