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Wipro shrugs off guidance concerns amid flat Q4 growth

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IT services major Wipro today announced flat sequential growth in net profit and sales for the quarter ending March 31, 2013. It gave weaker-than-expected revenue guidance for the first quarter of the financial year 2013-14, but said growth would accelerate in the second quarter.

The company posted a net profit of Rs. 1,729 crore in the fourth quarter of the financial year ended March 31, 2013. The net profit is a 17 per cent increase year-on-year, but flat compared to the December quarter.

Total revenues came in at Rs. 11,026 crore, a 12 per cent increase year-on-year, but an insignificant rise from the last quarter.

For the third quarter ended December 2012, the company had reported revenues of Rs. 11,025 crore and a net profit of Rs. 1,716 crore.

India's third-largest software services provider shrugged off concerns on its Q1 guidance, saying the first quarter has traditionally always been weak for the company.

Wipro, whose customers include Citigroup and Apple, projected first-quarter revenue for its IT services business to be in a range of $1.58 billion to $1.61 billion, a decline of 0.6 per cent to a rise of 1.6 per cent over the previous quarter. That compares with a range of 1.5-4 per cent that analysts were expecting.

Speaking to NDTV after the results were announced, Suresh Senapaty, executive director and chief financial officer of Wipro, said the company's business mix, especially of India and the Middle East, makes the first quarter weak, and that business would pick up in the second quarter of the financial year 2013-14.

The management said it is confident of growth recovering in the second quarter of the financial year ending March 2014. Wipro does not give annual guidance.

"The cross currencies have been volatile and impacted our financial performance in the quarter. Excluding the impact of foreign exchange, we have been able to maintain margins on a sequential basis. We have shown significant improvements in cash flow generation for the year," said a statement from the company citing Mr. Senapaty.

Revenue from IT services rose 0.5 per cent sequentially and 3.2 per cent year on year to $1,585.1 million.

The company declared a final dividend of Rs. 5 per share, taking the total dividend declared during the year to Rs. 7 per share.

Azim Premji, chairman of Wipro, said: "We have completed the demerger of the 'Diversified Business' effective March 31, 2013 to make Wipro Ltd a pure-play IT company. We are confident that being a technology-focused company will provide a fresh momentum for growth."

The IT services segment of Wipro hired 2,907 staff and added 52 new customers in the fourth quarter.

T.K. Kurien, executive director and chief executive officer, IT business, said: "We continue to see improvement in our customer satisfaction and employee engagement. Our continued investments in the go-to-market organization positions us well for the future."

The Wipro stock closed at Rs. 368.65, down 1.68 per cent, on Thursday ahead of the results announcement. The BSE infotech index ended 0.31 per cent lower while the benchmark Sensex soared 285.30 points, or 1.52 per cent, to end the day at 19,016.46. Markets are closed in India today for a public holiday.

Wipro is the last of India's major software services providers to report results for the latest quarter.

Industry leader Tata Consultancy Services on Wednesday reported profits that were roughly in line with estimates and said the company would grow faster than the industry in the current fiscal year.

Second-ranked Infosys on April 11 missed expectations with a full-year dollar-revenue forecast of 6-10 per cent. That dimmed investor hopes that it will soon benefit from a strategic revamp aimed at boosting revenue from software products and consultancy-led services.

On Wednesday, fourth-ranked HCL Technologies reported March quarter profits and revenue that beat analysts' estimates after it cut staff for the second quarter in a row.

With inputs from Reuters

Story first published on: April 19, 2013 08:10 (IST)

Tags: Wipro, IT, Infosys, HCL Tech, TCS, Suresh Senapaty, T.K. Kurien, Azim Premji

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