Cognizant overtakes Wipro in June quarter revenues

IT services firm Cognizant on Tuesday met its own guidance and analysts' estimates in its second quarter numbers on the back of strong demand for its services across geographies. More importantly, the Nasdaq-listed company, for the first time, overtook its closest rival Wipro in terms of revenues to become the third largest IT services player in India.

In the second quarter ended June 30, 2011 (Cognizant follows the calendar year), the company posted 21 per cent growth in its GAAP net profit, at $208 million, when compared with the corresponding quarter of the previous year. The revenues of the company in the quarter grew 34.4 per cent to $1,485 million over the same period in the previous year.

Cognizant not only met its own revenue guidance of $1.46 billion for the April-June quarter, its revenues for Q2 of 2011 and the guidance given for Q3 were ahead of Wipro, the third largest IT services company in India. In the quarter ended June 30, 2011, Wipro’s IT services revenues stood at $1,408 million, $77 million lower that Cognizant's. Cognizant has given a revenue outlook of $1.57 billion for the third quarter ending September 30, 2011. This is at least $106 million higher than Wipro’s revenue outlook for the period — $1.43 billion to $1.46 billion.

“We continue to see stronger than anticipated demand for our increasing range of services across the industries we serve. Over this past year, we have seen clients seeking our services not just to drive operational efficiencies, but also to transform their businesses to adapt to next generation technologies,” said Francisco D’Souza, President and CEO, Cognizant.

The Q2 numbers of the company were also driven by a strong volume growth of 8.3 per cent, higher than its other Indian competitors. The company’s offshore utilisation rate (excluding trainees) stood at 80 per cent, also much better in compared with the other Indian IT services players.

“Despite no pent-up demand, Cognizant’s performance indicates strength in the overall demand environment. We believe the demand is still strong enough to drive 25 per cent plus growth for tier-1 Indian IT,” Shashi Bhusan, senior research analyst, institutional equities, Prabhudas Lilladher, said in a note. He added that Cognizant’s revenue growth of 8.3 per cent (QoQ) was ahead of the consensus estimates.