Wipro Sept quarter results meet expectations, still lags rivals

India's fourth largest IT services exporter Wipro on Tuesday reported numbers that hinted the firm was springing back to life after many quarters but the company still lagged its larger rivals, TCS and Infosys, in dollar growth.

Wipro's IT services revenues for the September quarter increased 2.7 per cent over the June quarter to $1.63 billion - the best growth numbers the company has posted in seven quarters.

The figures were in line with its own guidance given at the end of the June quarter and that of many analysts - the Street was expecting dollar revenues to grow between 2 per cent and 4 per cent, similar to what the company had guided.

In contrast, rival TCS's revenues jumped 5.4 per cent sequentially in the September quarter while Infosys grew 3.8 per cent.

Wipro reported net profits of Rs 1,932 crore, up 19 per cent. Operating margins increased to 22.5 per cent from 20 per cent in the previous quarter due to better utilisation.

Going by industry verticals, Wipro's growth was led by Healthcare and Life Sciences that grew 5.5 per cent and Media and Telecom that grew 4.9 per cent. While India and the Middle East business declined 2.2 per cent, APAC and other emerging markets grew the fastest at 6.3 per cent.

"We have been able to execute on the Wipro strategy - latch on to existing accounts, open new accounts, and bring domain-led solutions to the market. I expect the momentum in Healthcare to continue," Sangita Singh, head of Wipro's Healthcare and Life Sciences vertical, said.

In the December quarter, the company now expects revenues from IT services to range between $1.66 billion and $1.69 billion - or a sequential growth between 1.8 per cent and 3.6 per cent.

"Next year, we can come back to industry growth," CEO T.K. Kurien hopped. "Our deal conversion has grown. There is broad-based growth. There is an uptick in discretionary spending. Our strategy has started delivering," the CEO added.

The company's net headcount additions dropped - Wipro now has 147,216 employees versus 147,281 in the June quarter, quite unusual for an IT services company. HR head Pratik Kumar said the company was driving non-linearity as well as productivity.

"The revenue is in line with expectations and Wipro has beaten Street estimates on margins. The guidance is decent enough since the December quarter is soft. The company can report 6-7 per cent growth for the full year," Sanjeev Hota, analyst with brokerage house Sharekhan said.

Wipro's stock closed 1.67 per cent up at Rs 514.90 on the Bombay Stock Exchange. The Sensex closed 0.14 per cent down at 20,864.97. Wipro declared results after the markets closed.