Wipro posts 22% jump in net profit

Fourth quarter results of the top four IT firms signal business recovery, though pressure on margins expected.

Wipro, India’s third-largest software services exporter and a fast-emerging player in the consumer care segment, echoed the chorus of information technology (IT) companies that the business environment is returning to normal.

Backed by good volume growth, Wipro posted a 22 per cent jump in fourth-quarter net profit at Rs 1,236 crore on a top line growth of eight per cent to Rs 6,984 crore, compared to the corresponding period in the previous year. On a sequential basis, the net and top line were flat. The company’s flagship software services exports, which brings in 75 per cent of revenues, backed by steady pricing, posted a seven per cent increase in top line at Rs 5,263 crore. This is a sequential growth of close to two per cent and the company has said it expected to grow this business by around 3.5 per cent during the first quarter of FY11 on a sequential basis.

Premji expects more
Azim Premji, chairman of Wipro, based his optimism on the fact that the company added 27 new clients during the fourth quarter and maintained good volumes, coupled with a steady pricing environment. He added: “We have large deals on the table. We have to be selective on which ones we want to bid on. These are large deals in India, Europe and America. Pricing is reasonably stable.”

The operating profit of the IT business for the quarter moved up 20 per cent at Rs 1,283 crore on a year-on-year (Y-o-Y) basis; sequentially, it moved up by 4.5 per cent. Suresh Senapaty, executive director and CFO, said the company had driven up margins by 60 basis points, despite wage increases, rupee appreciation and the impact of cross-currency.

Infosys gets leg-up
Based on the guidance to the markets, however, Infosys Technologies emerged the favourite of analysts. The company’s prediction for revenue of $5.57-5.67 billion for FY11 indicated growth of 16-18 per cent from the previous year.

“The top three firms have performed quite well. The numbers have been on expected lines. But, Infosys is the best among the pack, based on its low-based growth last year and a better outlook for FY11. We think these three firms will have a growth trajectory of 20 per cent,” said an analyst of a leading brokerage house.
 

LOGGING ONTO A BETTER FUTURE
	REVENUE (Rs cr)				PAT (Rs cr)
	Q4   FY09	Q4 FY10	% Y-o-Y	% Q-o-Q	Q4 FY09	Q4 FY10	% Y-o-Y	% Q-o-Q
TCS	7,172	7,738	7.9	1.17	1,333	2,001	50.1	9.7
Infosys	5,635	5,944	5.5	3.5	1,615	1,600	(0.9)*	1.1
Wipro#	4,932	5,260	7	1.8	1,072	1,282	20	4.5
HCL Tech**	2,861.50	3,076	7.5	1.4	218	344	57.7	15.9
(Consolidated Indian GAAP figures; *Figures in brackets imply dip in growth, not losses; PAT: Profit after tax) ** For HCL Tech, this is the third quarter # Wipro Technologies started following International Financial Reporting Standards, or IFRS, from last quarter. The company does not give PAT numbers for IT operations. The numbers mentioned here are for profit before interest and tax

Azim Premji varsity to begin in two years
Azim Premji University, the private university being established in Bangalore by the Azim Premji Foundation, is expected to start operations in two years. The university will focus on building teaching skills, based on the premise that there is a dearth of good-quality teachers in the country.

“Scanning the education environment in India, there is not a single university that specialises in building (skills of) teachers. At Wipro Foundation, we have worked with children and have seen how quality of education is extremely influenced by teachers. Well-trained teachers in schools make a huge difference in quality of education,” Premji said.