Riding a wave of new outsourcing orders from global companies, Wipro Ltd on Wednesday announced a net profit of Rs 700 crore for the July-September quarter of 2006-07, a surge of 46 per cent compared with the same period of the previous financial year. The information technology giant's revenues rose by 41 per cent year-on-year to Rs 3, 546 crore during the financial year's second quarter.
Encouraged by the robust growth during the second quarter, Wipro projected a higher guidance from its IT services and products business for the next quarter (October-December). The revenue from its global IT business was projected at $633 million for the third quarter of this financial year.
Shares in Wipro, which rose 11.5 per cent in the past seven sessions as software firms reported strong earnings, ended 17.45 rupees down at 557.25 rupees in a flat Bombay Stock Exchange. Wipro's robust results followed similar performances from Tata Consultancy Services and Infosys, underlying a solid environment in the sector as a whole.
Wipro, a diversified firm with minor interests in computer hardware and consumer goods such as lighting and soaps with familiar brands like Santoor, is worth about $18 billion in the market, of which Chairman Azim Premji controls about 80 per cent.
Premji, who last week lost the title of richest man in India to Reliance chairman Mukesh Ambani after a surge in Reliance shares, said, “We are seeing a great momentum in all our businesses. Revenues from our global IT services at $589 million for the quarter were ahead of our guidance of $577 million, primarily driven by strong growth in our differentiated services and focus verticals. We added 54 new clients of which 11 were Global 500/ Fortune 1000 clients."
"Overall, we believe that the demand environment is robust and we have the right strategy in place. The investments we made during the last 12 months are beginning to deliver value. As we move into the second half of the year, we see good prospects ahead," Premji said.
Accounting for 77 per cent of the company's total revenue and 89 per cent of the PBIT (profit before income tax) in Q2, the global IT business posted Rs 2,720 crore ($591 million), registering 44 per cent YoY growth and beating the guidance of $577 million, given at the beginning of the quarter under review.
With a net addition of 5,328 people in the global IT business during the second quarter, the company's total number of employees has increased to 61,179 from 56,435 at the end of the first quarter ending June 30.
As on September 30, the global IT business had 45,824 software engineers and 15,355 employees in its BPO (business process outsourcing) operations. About 605 employees joined the company on account of the acquisitions made during the latest quarter.
On Wipro’s plans for acquisitions in the consumer care and IT sector, Premji said, “Our acquisition strategy is not confined to overseas alone. We continue to look for acquisitions within the country as well as abroad. If they (companies) are strategically fit for our business growth, we will certainly be interested in evaluating them.”
Wipro's Chief Financial Officer Suresh Senapaty said, “We may look for big deals that could be upward of $20 million to $25 million in the IT or consumer care space, provided they contribute to our business growth and add value to our portfolio in the coming quarters."