Wipro Q4 revenues steady, expects growth momentum from demerger

Wipro expects to continue its flat revenue growth trajectory over the coming months. However, the company is hopeful a recent demerger will bring "fresh momentum for growth".
Written by Mahesh Sharma, Correspondent

Wipro's IT services division generated revenues of US$1.6 billion for the three months to March 31, 2013--a marginal improvement from the previous quarter and over the year. This was in line with the company's guidance of between US$1.59 billion and US$1.63 billion.
In an earnings statementfor Q4 2013, Wipro said the segment's quarterly revenues grew 0.5 percent compared to the previous three months, and 3.2 percent over the year.
Total net income for IT services was US$317 million, before interest and tax, up 10 percent on the corresponding period in 2012. This figure was mostly in line with the US$309 million average predicted by 19 analysts polled by Thomson Reuters. 
In Friday market closing on India's National Stock Exchange, Wipro stock was down 1.68 percent to 368.65 rupees. 
For the first quarter of FY14, ending June 30, Wipro expects flat sequential growth with revenues in the range of US$1.58 billion to US$1.61 billion.
This quarterly prediction trails the expected growth of the Indian IT industry. Nasscom forecast that India's IT services industry will grow by 10 percent to 14 percent in FY14.
In the statement, Wipro chairman Azim Premji said the new financial year heralds the operation of a recently demerged Wipro, one where the IT services business unit has been separated from the consumer care and lighting segment.
“We have completed the demerger of the ‘Diversified Business’ effective March 31, 2013 to make Wipro Limited a pure play IT company," Premji said. "We are confident that being a technology-focused company will provide a fresh momentum for growth.”

Wipro's mixed IT bag

The FY13 IT services earnings before tax and interest (EBIT) of US$1.28 billion represented a year-on-year growth of 18 percent. Overall income increased five percent to US$6.2 billion.
However, the results weren't so positive in the IT products segment where EBIT dropped to US$18million: down 45 percent over the year. This was on the back of US$720 million revenue, an increase of two percent over that period.
In the products business, the Q4 2013 figure of US$5 million was a decrease of 39 percent compared to the corresponding period in the previous year.
Wipro's report rounds up the earnings season of the four big Indian IT outsourcers who for the quarter ending March 31, 2013, revealed:
  • Tata Consultancy Services posted a US$663 net profit.
  • Infosys reported a 4 percent drop to US$444 million.
  • HCL flagged a 60 percent profit increase at US$193 million.
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