Wipro Q2 net up 19%, guidance for Q3 cautious

Wipro,  the soaps to software major, riding on operational efficiencies has reported a 19 per cent increase in its net profit to Rs 978 crore for the second quarter of the current fiscal when compared to the corresponding period of last year. Revenues were up 36 per cent at Rs 6,507 crore.

The flagship IT business division grew by 36 per cent to Rs 4,750 crore. In dollar terms, this business grew by 29 per cent y-o-y to $1,110 million and a sequential growth of 4 per cent. The profit before tax for the IT services business grew by 30 per cent to Rs 996 crore.

Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said - "The performance for the quarter is a strong reflection on our ability to deliver operational efficiencies. Rate Realization and Fixed Price Projects mix improved sequentially by 200 basis points and 100 basis points respectively. Our continued emphasis on driving Utilization through an integrated delivery model resulted in Utilization moving up by 240 basis points. These strong gains on operational front helped us improve our margins in the IT Services business in spite of effecting salary increases."

However, the major concern for Wipro is the guidance for its IT services business. Wipro has said that it will grow this business by just under 1 per cent for the third quarter. Said Azim Premji, chairman, Wipro: "The global economic environment has deteriorated significantly over the past couple of months, and our outlook is cautious in the near term given the extent of strain on the global economy. However, we are confident on the resilience of our business model to tide over these challenging times. Looking ahead, for the quarter ending December 31, 2008, we expect our Revenue from our IT Services business to be approximately $1,121 million.”