Wipro, India's third largest IT services company surprised the street by delivering better than expected numbers on the back of demand from customers in sector like healthcare and life sciences and retail.
The Bengaluru-based company reported net profit of Rs 2,192 crore for the third quarter ended December 31, 2014 up 9% on a year-on-year basis while on sequential basis net profit was up 5%. Revenue at Rs 11,992 crore grew 6% on YoY basis and 2.7% on sequential quarter basis.
In the IT services business (excluding the IT products business), the company managed to inch closer to the upper end of the guidance in constant currency term posting 3.7% growth at $1,836.2 million. This was better than what the closest competitors TCS and Infosys reported during the same period. However, in the reported currency, the Dollar term IT services revenue growth was 1.3% on QoQ basis, ahead of the street’s expectation which pegged it to be around 0.8%.
As per the IFRS standards, the IT services revenues at Rs 11,322.5 crore was a growth of 10% over the corresponding period last fiscal and same period in the previous fiscal and 3.7% sequentially.
“This is for the first time after many many quarters, we saw every business performing as per our expectations,” T K Kurien, Executive Director and Chief Executive Officer of the company said. “Going by the order pipeline and secular growth we see across the industry, I can certainly tell that we are far more bullish for the next year (FY16) than what we ere at this point of time last year,” he added.
However, despite posting healthy topline and bottomline growth, the company saw a 20 basis points contraction in its operating profit margin (for IT services business) at 21.8% primarily because of the impact of cross currency movements. The utilization rates also dropped sequential by 60 basis points to 78.8% (excluding trainees).
"Wipro’s Q3FY15 beat expectations on revenues as well as margins. The 3.7% (constant currency) revenue growth was better than larger peers and the best in the past 12 quarters,” said Dipen Shah, Head- Private Client Group Research, Kotak Securities. “Wipro has won marquee deals over the past few quarters, which should help in accelerating growth, going ahead."
Among the geographies, the growth was backed by Americas which grew 2% and the India and Middle East business which grew 5.7% on sequential quarter basis. However, the company said the growth in Europe is expected to continue subdued for one more, primarily because the headwinds in the oil & gas segment and also currency volatility.
In terms of business lines, the growth was driven by Healthcare and Life Sciences business which grew 6.1% over the previous quarter followed by Retail, Consumer Goods & Transportation at 2.7%. Financial solutions (BFSI) segment continued to show sluggish growth in constant currency term dragged by the insurance segment.
The company however once again gave wide range of growth outlook for the next quarter. For the quarter ending March 31, 2015, Wipro expects its IT services revenues to be in the range of $1814 million to $1850, a growth of 1.03% to 3.04% over the previous years.
Kurien said the wide guidance range is primarily due to the external factors which include currency fluctuations as well as the fall in the oil prices. “Overall, the demand environment continues to hold steady with opportunities across key markets in North America and Europe. We see a recovery of demand in the retail and manufacturing sectors…One area of caution is Oil & Gas industry where we expect the plunge in crude prices impact capex and discretionary spend in the near term,” added Kurien.
During the quarter, Wipro added 44 clients including 8 large deals while the number of clients contributing over $75 million in revenues per annum increased by one to 16. The company also added 2569 employee on net basis which took its overall headcount to 1,56,866 as of December 31, 2014.
No comments:
Post a Comment