Wipro tanks on weak revenue guidance

The company forecast revenue of $1.58 billion to $1.61 billion for its IT services business for the quarter ending June quarter, compared with $1.59 billion March quarter.

Wipro has tanked 8% to Rs 340 in early morning trades on BSE after the company forecast weak sales at its technology division for the current quarter ending June 2013.

Wipro, India's third-largest software exporter by sales, forecast revenue of $1.58 billion to $1.61 billion for its IT services business for the quarter ending June quarter, compared with $1.59 billion March quarter.

Meanwhile, the company has reported a marginal 0.72% quarter-on-quarter (qoq) growth in its consolidated net profit at Rs 1,729 crore for the quarter ended March 2013. Total income from operations grew 0.27% at Rs 9,613 crore on sequential basis. The consolidated results include IT business, consumer care and lighting and others.

Suresh Senapaty, executive director and chief financial officer of Wipro, said – “The cross currencies have been volatile and impacted the company’s financial performance in the quarter. Excluding the impact of foreign exchange, the company has been able to maintain margins on a sequential basis.”

“Wipro’s EBITDA margin grew by 30bp qoq to 20.4% while its EBIT margin declined by 100bp qoq to 16.7% because of 60bp qoq decline in IT services EBIT margin to 20.2%. IT services EBIT margin decline because the company hired 2,907 employees which led to increase in employee cost,” says analyst at Angel Broking.

Azim Premji, Chairman of Wipro, commenting on the results said – “We are confident that being a technology-focused company will provide a fresh momentum for growth.”

The company has dermerged its non-IT business in separate company called Wipro Enterprises effective March 31, 2013 to make Wipro a pure play IT firm.