After the standout performance by TCS and HCL Technologies, Wipro has also managed to exceed market expectations with its results for the Oct-Dec quarter. Though margins remained under pressure, the company has managed to achieve very commendable growth rates in both top line and bottom line.
For the quarter ended 31st December 2006, consolidated net profit has increased 40.83 per cent to Rs765.4 crore, or Rs5.28 per share, from Rs543.5 crore, or Rs3.8 per share, for the previous year quarter. On a sequential basis, net profit has increased 9.31 per cent from Rs700.2 crore for the quarter ended September 2006
Consolidated revenues for the quarter at Rs3,979 crore were higher by 45.01 per cent as compared to Rs2,743.9 crore reported for the previous year quarter. Sequentially, revenues have increased 12.21 per cent from Rs3,546.2 crore for the previous quarter.
Consolidated operating profits increased 33.07 per cent over the previous year quarter. Operating margins as a percentage of consolidated revenues declined to 19.8 per cent from 21.58 per cent for the previous year quarter. Operating margins were 20.99 per cent for the previous quarter.
The decline in operating margins was mostly on account of a 50.43 per cent jump in staff costs and cost of sales. Selling expenses went up by 31.35 per cent while general expenses were higher by 41.81 per cent
Other income for the quarter was much higher at Rs82.45 crore as compared to Rs17.65 crore for the previous year quarter. Income from mutual fund investments went up to Rs59.23 crore from Rs36.68 crore. Other income, including foreign exchange gains, were at Rs23.23 crore as compared to a loss of Rs19.03 crore for the previous year quarter Global IT revenues and products revenues increased 35 per cent year-on-year. In Dollar terms, global IT revenues were $640.5 million for the quarter - higher than the company's earlier guidance of $633 million. The IT services business achieved a revenue growth of 30 per cent while top line growth in BPO services was 24 per cent. Recently acquired business reported revenues of Rs143.5 crore as compared to Rs5.9 crore for the previous year quarter.
Global IT services division added 37 new clients during the quarter, including a large client. Wipro said the identity of the large client and the nature of deal would be disclosed later.
Domestic and Asia-Pacific IT services and products division, which includes hardware business, has reported a revenue growth of 76 per cent from last year while the consumer care and lighting business achieved a growth of 36 per cent.
Operating margins of the IT services business declined to 25 per cent from 26 per cent a year ago. BPO services margins improved substantially to 23 per cent from 16 per cent for the previous year quarter. Operating margins at recently acquired business were very low at 4 per cent In terms of geographic mix, US revenues declined to 48 per cent of total revenues from 50 per cent a year ago. Contribution of Europe remained steady at 24 per cent while domestic revenues increased to 22 per cent from 20 per cent during the previous year quarter.
During the quarter Wipro acquired European company Hydrauto Group for nearly Rs140 crore, which is into hydraulic equipment manufacturing. The company also acquired 3D Networks and Planet PSG for a total consideration of nearly $44 million, including future performance linked payouts.
For the last quarter of 2006-07, Wipro has given a revenue guidance of $685 million for the global IT services business.