Wipro Limited, the third largest IT services company, has followed the lead from Infosys and TCS and has declared better than expected results for the second quarter. Further improvement in operating margins in the BPO business helped the company to maintain overall margins.

For the quarter ended 30 September, 2006, Wipro has reported a consolidated net profit of Rs700.22 crore, or Rs4.84 per share, an increase of 46.49 per cent over Rs478 crore, or Rs3.36 per share, reported for the previous year quarter. On a sequential basis, net profits have gone up 12.87 per cent from Rs620.39 crore for the previous quarter ended June 2006.

Consolidated operating revenues have increased 42.64 per cent to Rs3,557.6 crore from Rs2,494.09 crore for the previous year quarter. Sequentially, revenues have increased 11.41 per cent from Rs3,193.39 crore for the previous quarter.

Global IT revenues have increased 44 per cent year-on-year and 11.02 per cent sequentially. Domestic IT services and product revenues have increased 36 per cent as compared to previous year quarter and 18.89 per cent from the previous quarter while revenues from consumer care & lighting has gone up 41 per cent year-on-year and 14.54 per cent sequentially.

Within global IT solutions, enterprise solutions contributed 58.6 per cent of revenues, 33 per cent came from technology solutions and the balance 8.4 per cent from BPO services.

Overall operating margins remained steady at 24 per cent on a year-on-year basis, but declined modestly from 25 per cent reported for the previous quarter. Among various divisions, IT services maintained the operating margin at 26 per cent - both sequentially and on a year-on-year basis.

The BPO division achieved a substantial jump in margins to 23 per cent from 13 per cent a year ago and 20 per cent during the previous quarter.

Recently its acquired businesses like Quantec, mPower, New Logic, cMango, Enabler, Saraware, etc, managed to turn in a modest profit at the operating level with a margin of 1 per cent as compared to a negative margin of 17 per cent during the previous quarter.

Global IT solutions division added 54 new clients during the quarter, including one client by the BPO division. Of these, 11 were large clients featuring in Fortune Global 500 or Fortune 1000 lists.

In terms of geographical mix, share of US revenues declined to 51 per cent of total revenues from 52 per cent for the previous quarter. Share of Europe was lower at 23 per cent as compared to 24 per cent while domestic revenues increased to 20 per cent from 19 per cent.

Wipro added a net 5,328 employees - including 605 employees from acquisitions - during the quarter, taking the total employee strength to 61,179 as at the end of the quarter. Of these, 15,355 employees were in the BPO division.

Other income for the quarter was higher at Rs69.38 crore as compared to Rs41.51 crore for the previous year quarter. More than half of other income was dividend income from mutual fund investments. Forward forex contracts as at the end of the quarter were $160 million and options to sell an additional $201 million, relating to future revenues.

Wipro has given a revenue guidance of $633 million from its global IT services & products business for the December 2006 quarter, as compared to $589 million achieved during the September quarter.