Wipro net profit rises 30% in Q1, but lags estimates | business | Hindustan Times
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Wipro net profit rises 30% in Q1, but lags estimates

business Updated: Jul 25, 2014 10:58 IST
HT Correspondent
HT Correspondent
Hindustan Times

India’s third-largest IT services company, Wipro, on Thursday reported a 30% year-on-year rise in net profit to Rs 2,100 crore during the April-June quarter but fell slightly short of analysts’ estimates of Rs 2,124 crore.

Revenue rose 14% to Rs 11,140 crore during the first quarter of 2014-15 on the back of of higher outsourcing spending by overseas clients and the company said it was focussing on winning more deals in Europe.

Wipro’s rivals Infosys and TCS had posted a 21.6% and 45% rise in April-June profit to Rs 2,886 crore and Rs 5,568 crore, respectively.

Core IT service revenue at Rs 10,510 crore registered an 18% year-on-year growth. However, operating margin came down from 24.5% to 22.8% on a sequential basis due to wage hike.

“We see a significant rise in business confidence in developed markets as well as India,” said Azim Premji, chairman, Wipro. “We continue to win large deals, particularly in the application and infrastructure space,” said TK Kurien, CEO, Wipro.

The company’s attrition level stood at 16% during the quarter and gross utilisation at 68.7%.

“Given our utilisation level, we clearly see a headspace to increase that,” said Sourabh Govil, senior vice-president, HR. The company is unlikely to substantially increase hiring this year, he hinted.

Besides the $1.2 billion, 10-year contract that came bundled with the $195-million acquisition of the IT business of Canada’s AT CO group that Wipro-announced last week, the company’s major deal wins in recent months including stainless steel major Outokumpu, pharma company Takeda and European media company Sanoma.

Wipro’s healthcare and life science vertical saw a revenue growth of 20% last quarter. “In North America we are seeing a return of discretionary spending,” said Kurien.

The company said it expects the second quarter revenue from IT service business to be in the range of $1.77 billion to $1.81 billion. “The second half of the financial year will be better than the first half,” he added.

“Wipro results were marginally lower than estimates. However, the guidance for the second quarter is encouraging,” said Dipen Shah, head, private client group research, Kotak Securities.