Wipro Net Rises, Beats Estimates as Orders, Rupee Lift Sales
January 22, 2012, 2:50 PM ESTBy Ketaki Gokhale and Jay Shankar
(Updates with closing share price in sixth paragraph.)
Jan. 20 (Bloomberg) -- Wipro Ltd., India’s third-largest software exporter, reported profit that beat analyst estimates as businesses sought savings through outsourcing and the rupee’s decline boosted overseas earnings.
Third-quarter net income rose 11 percent to 14.6 billion rupees ($291 million) in the three months ended Dec. 31 from 13.2 billion rupees a year earlier, Bangalore-based Wipro said in a statement today. That beat the 14.5 billion-rupee median of 48 analyst estimates compiled by Bloomberg.
Wipro joins larger Tata Consultancy Services Ltd. and Accenture Plc in reporting profit that exceeded analyst estimates, signaling that demand for software maintenance and advisory services remains buoyant. Wipro said revenue from its information-technology services business may grow 1 percent to 3 percent to between $1.52 billion and $1.55 billion this quarter.
“Based on some of the deal wins Wipro has had in the U.S. and Europe, their onsite volumes could be on the rise, which could lead to a better growth outlook in the next quarter or so,” Shashi Bhusan, an analyst at Prabhudas Lilladher Pvt. in Mumbai, said before the earnings announcement. He has an “accumulate” rating on the shares.
The company boosted revenue 28 percent to 99.97 billion rupees in the past three months and won orders, including a five-year contract from U.K.-based Premier Foods. That lagged behind the 101.1 billion rupees median of 13 analyst estimates compiled by Bloomberg.
‘Uncertain’ Climate
Wipro rose 2.4 percent to 413.75 rupees, the biggest gain in a week, at the close of trading in Mumbai. The stock fell 19 percent last year compared with the 25 percent drop in the Sensex and the 0.4 percent decline by Tata Consultancy, India’s biggest software exporter.
“The overall macroeconomic sentiments continue to be uncertain and we are monitoring it closely,” Chairman Azim Premji said in a statement. “We continue to execute on our strategy and propel the business towards a higher growth trajectory.”
Wipro doesn’t give sales or profit forecasts for all its businesses combined. The company also makes light bulbs, hydraulic equipment, soap and other consumer products.
Sales at the I.T. unit in the three months ended December were $1.51 billion, Wipro said.
Rupee Depreciation
Wipro, which provides services such as designing and building software programs, product-engineering and back-office support to companies including BP Plc, William Morrison Supermarkets Plc. and Pitney Bowes Inc., added 39 new clients in the last quarter and 5,004 employees at its I.T. services unit, according to the statement.
The company will pay a midyear dividend of 2 rupees a share. Other investment income in the third quarter jumped to 2.15 billion rupees from 1.75 billion rupees a year earlier.
The Indian rupee fell 16 percent in 2011, the worst performance among Asian currencies, before appreciating this year. The currency weakened 7.7 percent in the quarter ended Dec. 31. A weaker rupee boosts the value of overseas earnings during repatriation.
Wipro draws the majority of its revenue in dollars and euros from clients based in U.S. and Europe. A stronger rupee damps the value of overseas earnings during repatriation.
Wipro drew 41 percent of its revenue in the year ended March 31 from the U.S., 22 percent from Europe and another 22 percent from India, according to the company’s annual report.
--Editors: Anand Krishnamoorthy, Michael Tighe.
To contact the reporters on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; Jay Shankar in Bangalore at jshankar1@bloomberg.net
To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net
