Wipro sees higher IT revenue in Q3 on strong growth

BANGALORE - Wipro Limited Friday projected marginally higher revenue of $1.33 billion from its global IT services business for the third quarter (Oct-Dec) of this fiscal (2010-11) on 4.5 percent sequential growth expectation.

We expect revenue from our IT services business to be $1.33 billion in third quarter as against $1.27 billion in second quarter (July-Sept) of this fiscal (FY 2011), Wipro chairman Azmi Premji said in a statement.

IT revenue of $1.27 billion for the quarter under review (Q2) is in line with the company’s guidance of $1.25-1.27 billion given in July.

Unlike rival Infosys Technologies Ltd, Wipro does not give annual revenue guidance or for its other business divisions.

The IT bellwether’s net profit for the second quarter (Q2) at Rs.1,285 crore (Rs.12.85 billion) is up 10 percent year-on-year (YoY) but down 2.7 percent sequentially from Rs.1,319 crore (Rs.13.19 billion) in first quarter (April-June) of this fiscal.

Total revenue for the quarter under review is Rs.7,731 crore (Rs.77.31 billion), an increase of 12 percent YoY and 6.8 percent quarter-on-quarter (QoQ) from Rs.7,236 crore (Rs.72.36 billion).

Under the International Financial Reporting Standards (IFRS), net income in second quarter is $288 million and total revenue $1.73 billion.

Revenue from its global IT services business in rupee terms is Rs.5,747 crore (Rs.57.47 billion).

We saw strong momentum in demand as customers tried to catch up with the under-investment in IT during the previous years. While the macro-economic environment continues to remain uncertain, there is higher degree of confidence at the micro level, Premji asserted.

Chief financial officer Suresh Senapaty, however, admitted that wage increase and sharp appreciation of rupee against the dollar during the quarter impacted the operating margin in IT services business by 2.5 percent sequentially.

Though we saw a strong volume growth of 6.6 percent sequentially, operating margin declined to 22.2 percent in second quarter from 24.7 percent in first quarter owing to 1.3 percent impact of employee progressions (wage hike) and 1.2 percent impact from lower foreign exchange realisation, Senapaty told IANS.

The company suffered $15 million loss due to currency volatility, which was three percent during the quarter and 12 percent on annualised basis.

As flagship business of the group company, IT services added 29 clients during the quarter under review as against 22 in the first quarter of this fiscal and 37 a year ago.

Earnings before interest and tax (Ebit) from IT services was Rs.12.75 billion ($286 million), an increase of seven percent YoY.

Total number of active clients at the end of second quarter is 890 as against 858 and 840 a year ago.

The company added 2,975 employees during the quarter for IT services business, taking the total headcount to 115,900 from 112,925 at the end of first quarter and 97,891 year ago.