Bloomberg News

Wipro Net Income Profit Rises on Outsourcing Demand

April 19, 2013

Wipro Quarterly Profit Rises on Increased Outsourcing Demand

The Wipro Ltd. logo is illuminated at night on the side of the company's offices in Bangalore. Photographer: Sanjit Das/Bloomberg

Wipro Ltd. (WPRO) posted a 17 percent gain in fourth-quarter profit as clients of the technology-services company controlled by billionaire Azim Premji maintained spending on outsourcing.

Net income rose to 17.3 billion rupees ($321 million) in the three months ended March 31, from 14.8 billion rupees a year earlier, Bangalore-based Wipro said in a statement today. That surpassed the 17.2 billion-rupee median of 42 analysts’ estimates compiled by Bloomberg.

Wipro and larger rival Tata Consultancy Services Ltd. (TCS) are benefiting as U.S. companies have more money to spend on information-technology services and as business grows in the Asia-Pacific region. Wipro also has benefited from growth in areas including business application services and technology infrastructure, said Shashi Bhusan, a Mumbai-based analyst at Prabhudas Lilladher Pvt.

“IT spending has been difficult to predict, so Wipro’s effort to maintain a client-base across various sectors has been a smart way to maintain gradual growth,” Bhusan said. “If Wipro remains diversified, it will remain a top software player across the world.”

The company this month completed the separation of its non- IT businesses into unlisted Wipro Enterprises. Wipro’s information-technology revenues reached $1.59 billion (86 billion rupees) in the fourth quarter, barely meeting the company’s $1.59 billion-$1.63 billion estimate.

Shares May Drop

Wipro forecast $1.575 billion to $1.610 billion of revenue from IT services for the quarter ending June, the company said today. Some of the deals the company expected to close in the fourth quarter are being pushed into the first and second quarters, Chief Financial Officer Suresh C. Senapaty said.

“We are starting the year with a little weaker guidance, but our expectation would be, of course, that we do better in the current fiscal year than what we did last year,” he said.

Still, the company’s estimate is below expectations based on the industry’s 12-14 percent growth forecast for fiscal 2014, said Harit Shah, a Mumbai-based analyst with Nirmal Bang Equities Ltd., adding that the target could lead Wipro shares to drop in New York trading later today and on April 22 in Mumbai.

“The lower end of the guidance is too low and not inspiring of much confidence,” Shah said.

Shares of Wipro fell 1.5 percent to 369.05 rupees in Mumbai trading yesterday. Markets are closed today for a local holiday. The stock has declined 12 percent in the past year and is the second-worst performer among the 10 companies tracked by the S&P BSE IT Index.

In New York yesterday, Wipro’s American depositary receipts rose 1.4 percent to $8.48, paring their decline in the past year to 5.2 percent.

To contact the reporters on this story: Kartikay Mehrotra in New Delhi at kmehrotra2@bloomberg.net; Suresh Seshadri in Bangalore at sseshadri1@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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