Bangalore: Wipro Ltd, India’s third largest IT exporter posted 21% rise in fourth quarter profit to Rs1,209 crore from Rs1,001 crore a year ago, as it won orders from customers such as Best Buy Co, Inc and the Main Street America Group and saw recovery in technology and telecom sectors hit hard by the economic downturn.
Revenue grew 8% to Rs6,983 crore during the three months to March.
A Reuters poll of brokers had forecast a net profit of Rs1,200 crore for Wipro.
“We have seen another strong growth of broad based, volume led growth. We saw good recovery in our challenged verticals of technology and telecom,” said Azim Premji, chairman of Wipro in a statement. “The business environment is returning to normal.”
Wipro joined its two bigger rivals in painting a strong outlook for the country’s showpiece software sector as it met expectations with quarterly profit rising by over a fifth.
Some analysts, however, said markets were pricing in most of the positive news.
The Bangalore-based firm rewarded its shareholders with two bonus shares for every three shares held. Premji and his family is the largest shareholder with 79.54% stake in the company.
“The guidance is slightly better than Infosys, but I would say that there is nothing extra-ordinary in it,” said Rohit Anand, an analyst with PINC Research in Mumbai.
“The bonus was, of course, a pleasant surprise,” Anand said, adding Wipro had adequate cash on its books.
Shares in Wipro, valued at more than $23 billion, pared early gains by 10:30 am on the BSE,were up 0.4%.
Wipro forecast nearly 3% revenue growth for the first quarter to June. It does not guide annual numbers. Last week, larger peer Infosys forecast 16-18% annual growth in dollar revenue for the year ahead.
The firm expects revenue from combined IT business – exports and domestic, to be $1.19 to $1.25 billion, on rising volume from customers.
Indian technology service vendors are witnessing robust demand for their services in the US and Europe as global corporations such as General Motors, General Electric and British Gas Transco increasingly outsource technology application development and maintainence work offshore to India.
India’s $60 billion outsourcing sector is winning new deals and seeing stability in fees for services after a brutal slide in demand following the global recession, but a firmer rupee and rising wages are concerns.
“We had a satisfying quarter. We have driven up margins by 60 basis points despite headwinds of wage increases, rupee appreciation and the impact of cross currency,” said Suresh Senapaty, director and chief financial officer of Wipro.
Growing competition from global firms such as IBM, Accenture and Hewlett-Packard is another key risk for the sector, which manages complex computer networks to maintaining technology operations for Fortune 500 clients.
Wipro rejigged its IT business by merging its India, Asia Pacific business and global IT services business into one entity, and brought in two joint chief executives to run the operations.
Wipro added 27 new clients. It hired 5,325 professionals to take its total employees to 1,08,071 in March.