Wipro Q2 Profit Rises 20% Amid Client Additions, Tops View

(RTTNews) - Indian software services provider Wipro Ltd. (WIT) reported Tuesday a profit for the second quarter that grew 20 percent from last year, helped by revenue growth amid client additions.

In dollar terms, earnings per share from continuing operations topped analysts' expectations, while quarterly revenues missed their estimates. Further, Wipro projects a sequential revenue growth for IT Services in the third quarter.

The company de-merged its 'Diversified Business' or non-IT related businesses, in to a separate unlisted company, Wipro Enterprises Ltd., effective March 31, 2013. The financial statements show the performance of the businesses as discontinued operations.

"Our sustained execution towards increasing operational efficiencies in the business coupled with currency benefits helped offset the impact of wage hikes resulting in strong improvements in operating margins," Executive Director and CFO Suresh Senapaty said in a statement.

The Bangalore, India-based company reported net income attributable to equity holders of 19.32 billion rupees or 7.85 rupees per share and in dollar terms $309 million or $0.13 per share, up from last year's 16.11 billion rupees or 6.55 rupees per share. Wipro reports results on the basis of International Financial Reporting Standards.

Net Income for continuing operations was 19.43 billion rupees or 7.85 rupees per share and in dollar terms $311 million or $0.13 per share, up from 15.04 billion rupees or 6.12 rupees per share last year. Excluding the impact of accelerated amortization of stock options, adjusted Net Income from continuing operations was 19.32 billion rupees or $309 million.

On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.11 per share for the quarter. Analysts' estimates typically exclude special items.

Wipro's second-quarter net income attributable to equity holders was 15.89 billion rupees or 6.60 rupees per share.

Total revenues from continuing operations for the quarter grew 19 percent to 109.92 billion rupees or $1.76 billion, from the same quarter last year. Seven Wall Street analysts had a consensus revenue estimate of $1.78 billion for the quarter.

"We achieved a broad based revenue growth across all industry verticals and continue to focus on executing to our strategy," CEO T.K. Kurien noted.

IT Services revenue in rupee terms was 100.68 billion rupees, or $1.61 billion, a year-over-year increase of 20 percent. IT services revenue in dollar terms was $1.63 billion, within the company's guidance range between $1.62 billion and $1.65 billion.

Operating margin for IT Services expanded 180 basis points to 22.5 percent from last year's 20.7 percent.

IT Products revenues grew 4 percent to 9.37 billion rupees, or $150 million from last year.

Wipro said its IT Services added 45 new clients in the quarter and also reported net reduction of 65 employees in the second quarter in IT Services.

Looking ahead to the third quarter, the company expects revenues from IT Services business to be in the range of $1.66 billion to $1.69 billion.

"There are positive indicators on the global economy. Client confidence is on the uptick and we see it reflected in our results," Chairman Azim Premji added.

Wipro's Bangalore-based peer, Infosys Technologies Ltd. (INFY) reported on October 11 a profit for the second quarter that declined 11 percent to $383 million or $0.57 per ADS, despite a 15 percent revenue growth to $2.07 billion, hurt by higher expenses. The group added 68 clients during the quarter.

In Tuesday's regular trading session, WIT is currently trading at $11.25, down $0.31 or 2.68% on a volume of 0.40 million shares. In the past 52-week period, the stock has been trading in a range of $6.74 to $11.76.

Wipro closed Tuesday's regular trading session on the Bombay Stock Exchange at 514.90 rupees, up 8.45 rupees or 1.67% on a volume of 0.51 million shares.