Wipro tumbles on muted dollar revenue growth sequentially

Wipro fell 5.89% to Rs 542.85 at 9:57 IST on BSE after the company's IT services business reported muted revenue growth in dollar terms in Q1 June 2014 over Q4 March 2014.

The result was announced after market hours on Thursday, 24 July 2014. Shares of Wipro had run up ahead of results. The stock jumped 7.72% in the preceding six trading sessions to Rs 576.80 on 24 July 2014, from a recent low of Rs 535.45 on 16 July 2014.

Meanwhile, the BSE Sensex was down 48.03 points, or 0.18%, to 26,223.82.

On BSE, so far 2.67 lakh shares were traded in the counter, compared with an average volume of 1.85 lakh shares in the past one quarter.

The stock hit a high of Rs 554.95 and a low of Rs 528 so far during the day. The stock hit a 52-week high of Rs 610.50 on 26 February 2014. The stock hit a 52-week low of Rs 368.70 on 26 July 2013.

The stock had outperformed the market over the past one month till 24 July 2014, rising 8.56% compared with 3.56% rise in the Sensex. The scrip had, however, underperformed the market in past one quarter, rising 9.87% as against Sensex's 14.84% rise.

The large-cap IT company has an equity capital of Rs 493.48 crore. Face value per share is Rs 2

On a consolidated basis, Wipro's IT services reported a dollar revenue growth of 1.2% to $1,740.20 million in Q1 June 2014 over Q4 March 2014.

Operating margin declined to 22.8% in Q1 June 2014 from 24.5% in Q4 March 2014, mainly because of wage raises for its 1.47 lakh employees.

Wipro saw an increase in attrition to 17% in Q1 June 2014 as against 15.7% in Q4 March 2014. The company attributes this rise in voluntary quarterly annualised attrition to employees typically leave for further education in the first quarter. Its Bangalore-based rival Infosys reported an attrition rate of close to 20% while TCS saw attrition level at 12%.

Wipro's consolidated net profit as per International Financial Reporting Standards (IFRS) jumped 30% to Rs 2100 crore on 14% growth in total revenue to Rs 11140 crore in Q1 June 2014 over Q1 June 2013.

Wipro's IT services revenue was $1.74 billion in Q1 June 2014, a sequential increase of 1.2% and year on year (YoY) increase of 9.6%. IT services revenues in rupee terms was Rs 10510 crore in Q1 June 2014, an increase of 18% YoY. IT services earnings before interest and tax (EBIT) was Rs 2400 crore in Q1 June 2014, an increase of 35% YoY. Non-GAAP constant currency IT services revenue in dollar terms was $1.725 billion in Q1 June 2014, which was within the company's guidance range of $1.715 billion to $1.755 billion.

Wipro expects revenue from IT services business to be in the range of $1.77 billion to $1.81 billion in Q2 September 2014.

T K Kurien, Executive Director & Chief Executive Officer, Wipro, said that the company continues to win large deals, particularly in the application and infrastructure space. These wins demonstrate confidence of clients in Wipro's transformational capabilities, he said. Suresh Senapaty, Executive Director & Chief Financial Officer, Wipro said that Wipro's operating margins for Q1 June 2014 was on expected lines, impacted largely due to wage hikes.

Wipro is a leading information technology, consulting and business process services company that delivers solutions to enable its clients do business better.

Powered by Capital Market - Live News