Wipro’s Q2 net profit down by 2.56% ; lags estimates

Wipro’s Q2 net profit down by 2.56% ; lags estimates

Bangalore: Wipro Limited, India’s third largest IT company has reported a 2.56% dip in net profit for the second quarter of 2010-11, posting a consolidated figure of Rs1,284.9 crore.

While market analysts had expected Wipro to show slower growth than the top two big wigs, TCS and Infosys, Wipro’s sequential q-o-q growth of 6.83%, with consolidated revenues for the quarter at Rs7,730 crore, was still below expectations, and the negative sequential growth was a surprise.

In the same period, Infosys grew by 12.1% while TCS grew by13%, posting record revenues for a quarter at well over $100 million for both companies. Infosys’ net profit sequentially was up by 16.7% at Rs1,737 crore, TCS posted a profit of Rs2,169 crore, up by 14%. Year-on-year profit for Wipro grew by 10% in comparison to TCS’s whopping 32% and Infosys’ 14%.

Wipro’s global IT revenues grew 5.7% at $1.27 billion. Global earnings before interest and tax (EBIT) margins declined at 22.2% while overall EBIT margins slipped to 18.1% as against 20% (q-o-q). Its Q3 guidance put global revenues at $1.32-1.34 billion.

Wipro chairman Azim Premji said in a press release: “We saw strong momentum in demand as customers tried to catch up with the under-investment in IT in the previous years. While the macro-economic environment continues to remain uncertain, there is higher degree of confidence at the micro level."

For the third quarter of the year, he said he expected a sequential increase of 3.5% to 5.5%.

Suresh Senapaty, executive director & chief financial Officer of Wipro, said, “We saw a strong volume growth of 6.6% driven by higher offshore mix. The Operating Margins for IT services declined during the quarter due to the impact of employee progressions, Restricted Stock Units grants and lower foreign exchange realizations."

Earnings per share for the quarter were Rs5.28. Wipro added 2975 employees net, compared to 7646 of Infosys.

Wipro is currently trading at Rs456.30, down by 13.45 points or 2.86% from its previous closing of Rs469.75 on the BSE sensex.

The scrip opened at Rs460 and has touched a high and low of Rs460.10 and Rs451.10 respectively. So far 111,916 shares were traded on the counter.

The BSE group ’A’ stock of face value Rs2 has touched a 52-week high of Rs499.90 on 15 October, 2010 and a 52 week low of Rs321.00 on 9 February, 2010.

Last one week high and low of the scrip stood at Rs499.90 and Rs459.20 respectively. The current market cap of the company is Rs112,030.63 crore.