Belying expectations of a dull business climate amid a US recession, Azim Premji’s IT services firm Wipro posted a 12 per cent increase in quarterly net profit for the quarter ended June 30 on Wednesday in a sign of the sector rebounding from a year of lows.
Wipro’s net profit went up to Rs 1,015.5 crore in April-June from from Rs 907.8 crore in the year-ago period, while revenues rose 5 per cent to Rs 6,274 crore. The results beat analyst expectations.
With good first quarter results, the industry seems to have taken a more positive view on IT sector.
“The worst is over and revival is seen in the IT sector,” said Harit Shah, IT analyst at Angel Broking. “Wipro numbers are decent and not extraordinary in the given situation. It is likely to take 2-3 quarters more to see good increase in numbers,” Shah said.
Wipro shares closed 1.5 per cent down at Rs 451 on the Bombay Stock Exchange in line with the benchmark Sensex.
Citing reasons for revival, Avinash Gupta, assistant vice president, Research-Equity of Bonanza Portfolio Ltd said, “The worst is over now and the sector is expanding. Companies had also cut costs during the downturn to be more viable and this is showing on their margins.”
Wipro’s results follow Tata Consultancy Services and Infosys Technologies. Both the companies posted above-forecast profit growth, infusing better sentiments in the Rs 2.8 lakh crore sector.
However, they said that business environment was still challenging in the current scenario.
Though there is talk of industry revival, the trend may not hold good for all IT companies. Experts said that companies such as Tech Mahindra cannot be compared with the likes of Wipro and Infosys, which are of a different genre.