Five takeaways from Wipro's results

Q4 net up 10% at Rs 2,227 cr q-o-q, announces dividend of Rs 5 per share

After HCL Tech, it was the turn of Wipro to post numbers well above analyst expectations. The company posted a net profit of Rs 2,227 crore against expectation of Rs 2,080 crore. A 10 per cent growth over the previous quarter was the highest growth recorded among the top four IT companies.

Following are the key takeaways from the company's numbers.

1. While net profit growth of Wipro was the highest amongst the top IT companies, its revenue growth was second to HCL Tech. The company posted a sequential growth of 2.5 per cent in dollar terms as compared to 3 per cent by HCL Tech. Revenue at $1,720.2 million is higher than the top end of its guidance of $ 1,701 million. 

2.  Wipro has steadily improved its EBIT (Earnings before interest and tax) margin to 24.5 per cent as compared to 23 per cent in the previous quarter and 20 per cent in March 2013. The current quarter’s margins are highest in the last 15 quarters. Analysts had expected EBIT margins to remain in the below 23 per cent range. Going forward however, margins might be impacted on account of salary increments and promotion which will come into effect from June 1, 2014.

3. Among the top four companies, Wipro has the lowest employee utilisation of 74.6 per cent, which is considerably lower than 84.2 per cent for HCL Tech and 78 per cent for the others.However, It's attrition rate of employees at 15.1 per cent  is lower than Infosys and HCL Tech but higher than TCS.

4. As has been the trend with other IT companies, Europe's contribution towards growth has been higher than US. In the case of Wipro, its Indian and Middle East business was the fastest growing.

5. Wipro's guidance at $1,720 million assumes a flat growth over the current quarter (Q1). Lower guidance is on account of a seasonally flat growth in India. The company in its media interaction says that Q1 numbers are not a precursor for the rest of FY15. It sees momentum building up as the year progresses.