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Wipro Q1 results meet estimates on strong outsourcing wins [DNA : Daily News & Analysis (India)](DNA : Daily News & Analysis (India) Via Acquire Media NewsEdge) Bangalore: IT services company Wipro announced its first quarter results on Thursday that was more or less being in line with analysts expectations. For the quarter ended June 30, the company registered a revenue growth of 1.2% at Rs 11,245.50 crore on sequential basis, while consolidated net profit stood at Rs 2,103 crore, down 5.6% on-quarter. On a year-on-year basis, the company reported a 29.5% growth in net profit, while revenues rose 15.5% during the quarter. The company expects sales from IT services to grow between1.7-4% in the next quarter (July-September) on the back of strong spending by overseas clients. Wipro recently won a 10-year deal to manage IT outsourcing of Canadian energy and utilities firm Atco. The Bangalore-headquartered company's operating margins declined sequentially by 150 basis points from 24.5% in Q4 of last fiscal to 22.8% in the April-June quarter mainly on account of wage hikes affected in June and restricted stock options given to some employees. "The decline in profit and margins is mainly due to the wage hikes. We gave average 8% wage hikes to offshore employees and 2% to onsite employees," said Suresh Senapaty, executive director and chief financial officer, Wipro. About 80-90% of the decline in profits and margins has been due to the wage hikes said Senapaty. The company has given a broad revenue guidance in the range of 1.7%-4% for the July-September quarter, which again is in line with estimates. "This is almost in line with what we had predicted, though it might be marginally down. This is mainly because of their product business," said Ashish Chopra, an IT analyst from Motilal Oswal Financial Services. "The guidance they have given is slightly troubling. The big range shows uncertainty in the minds. The big gap in the guidance is somewhat baffling," said Daljeet S Kohli, head of research, IndiaNivesh Securities. However, despite the good results, TK Kurien, executive director and CEO, Wipro, feels there is still a long way to go. "Our year-on-year growth rate for the first quarter (April-June) is 9.6% this year, as against 4.5% in Q1 for FY14, so there has been a substantial improvement in growth rates. But having said that, I think it is too early to declare victory; we have plenty of work to do," he said. "So, if we come up with a guidance of 4% in the first quarter of next year, then I can say that we are now done. Till then I don't think we can say much. Traditionally for Wipro, the first quarter has never been that strong. "I really want to nix this bogey," said Kurien. The company's attrition rate stood at 16.1%. Saurabh Govil, senior vice president of HR, said efforts are being made to bring down the percentage. "We are giving restricted stock units to some of our employees and salary increases," he said. Cracking the code The company expects sales from IT services to grow between1.7-4% in the next quarter (July-September) on the back of strong spending by overseas clients. Wipro recently won a 10-year deal to manage IT outsourcing of Canadian energy and utilities firm Atco Credit:dna correspondent (c) 2014 @ 2014 DILIGENT MEDIA CORPORATION LTD. ALL RIGHTS RESERVED |