Wipro Q2 consolidated net up 19% at Rs 1,161 cr

Wipro Limited, backed by increases in price realisation, utilisation and fixed price contracts at its flagship IT services business, posted a 19 per cent increase in its net profit to Rs 1,162 crore for the second quarter ended September 30, 2009 as compared to the corresponding quarter of the previous financial year.

The company which also sells soaps, furniture and hydraulic equipment saw its topline move up 6 per cent to Rs 6,917 crore.  On a sequential basis, the net has moved up smartly by 14 per cent while the topline by 10 per cent. The flagship IT services' division's revenues at Rs 4,995 crore was up 5 per cent year-on-year (YoY) and 4 per cent quarter-on-quarter (QoQ). In US dollar terms revenues at $1,065.2 million, saw a sequential growth of 3.2 per cent and YoY decline of 4 per cent.

Wipro managed to meet its estimates and has guided the street that revenues from IT services for the third quarter (October-December 2009) will grow by 2.5 per cent. The company's stock was up 2.18 per cent to close at Rs 604.15 on the Bombay Stock Exchange (BSE) today.

Azim Premji, the billionaire chairman of Wipro said they see more stability in volumes and pricing as well as an improving demand environment for IT services which accounts for 72 per cent of Wipro’s topline.

Backed by a 4 per cent price increase for its software services contracts and an 80 basis points increase in utilisation, the operating profit for IT services grew by 19 per cent to Rs 1,187 crore. Wipro’s IT business also had a dramatic increase in its fixed price contracts as it accounted for almost 41 per cent of its total contracts. During the corresponding previous period, the share of the fixed price contract was at around 32 per cent.

Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, added that operational improvements continued to pay dividend, resulting in double digit sequential growth in Profit After Tax. Margins for the IT Services business stood at 23.8 per cent, an expansion of 143 bps sequentially and 279 bps YoY.

The IT services business added 37 new clients during the quarter and had a total employee base of close to 98,000.