Wipro: Rupee rise impacted margins by 3.4%, able to cap it at 2.4%; Increasing fixed price contracts for better realisations

Wipro has announced its numbers today. The Q1 Net Profit is down 15.2% at Rs 726 crore from Rs 856 crore (QoQ). The Q1 revenue is down 3% at Rs 4,203 crore from Rs 4,333 crore (QoQ).

Q1 Global IT revenues are at $ 726.1 million vs guidance of $ 711 million. They have guided Q2 Global IT revenues at $ 777 million. The company says that the margins have dropped by 250 bps sequentially.

The Wipro management in reaction to its numbers said that the rupee rise impacted the margins by 3.4%, but they have been able to cap it at 2.4%. Among the deals won during the quarter included a $ 130 million multi-year Total Outsourcing engagement from a utility company in Europe. The company says that the $ 130 million order from Europe will contribute from Q2 and is factored in the guidance.

The company is increasing its fixed price contracts for better realisations. They will recover some damage on the forex front via hedges. Most of the growth in Q2 will be volume driven. Global IT revenue growth is seen at 7% (QoQ) in Q2. The Q2 growth is expected to come from BFSI, Telecom, Tech & Media services and BPO. The margins are also expected to be sustainable at current levels for now.

Wipro has a forex cover of $ 400 million as on June 30, 2007. The utilisation improved by 4%, and helped restrict fall in OPM to 2.5%. They see BPO OPM at current levels, attrition down and utilisations up. Wage hike for offshore employee will impact margins by 140-150 bps.

Global IT Services & Products added 39 new clients in the quarter. Wipro's India, Middle East & Asia Pac business recorded 61% growth in PBIT YoY. Revenue grew 64% YoY. Wipro Consumer Care and Lighting business Revenue grew 33% YoY and PBIT grew 32% YoY.



Wipro Q1 Net Profit down 15.2% at Rs 726 Cr; Revenue down 3% at Rs 4,203 Cr

Wipro has announced its numbers. The Q1 Net Profit is down 15.2% at Rs 726 crore from Rs 856 crore (QoQ). The Q1 revenue is down 3% at Rs 4,203 crore from Rs 4,333 crore (QoQ).

Q1 Global IT revenues are at $ 726.1 million vs guidance of $ 711 million. They have guided Q2 Global IT revenues at $ 777 million. The company says that the margins have dropped by 250 bps sequentially.

Global IT Services & Products added 39 new clients in the quarter. Deals won during the quarter included a $ 130 million multi-year Total Outsourcing engagement from a utility company in Europe. Wipro's India, Middle East & Asia Pac business recorded 61% growth in PBIT YoY. Revenue grew 64% YoY.

Wipro Consumer Care and Lighting business Revenue grew 33% YoY and PBIT grew 32% YoY. Also, Wipro signed a definitive agreement to acquire Unza, a leading Personal Care Company based in Singapore.

Azim Premji, Chairman of Wipro, commenting on the results said, “The results for the quarter are satisfying considering the strong headwinds faced by us in the form of an appreciating rupee. Our IT Services Business continued to witness broad based growth, across Verticals, Geographies and Service lines. Our growth in Revenues was primarily driven by strong volume growth across our business units. Our differentiated services, Technology Infrastructure Services and Package Implementation grew by over 50% YoY, while our Business Process Outsourcing (BPO) & Testing Services delivered growth in excess of 40% YoY."

"Amongst our Verticals we saw strong growth in Finance Solutions, Telecom Service Providers, Manufacturing and Technology, Media, Transportation & Services Verticals. Our new client additions continues to be robust and we have had a good set of wins during the quarter in our BPO, Package Implementation and Technology Infrastructure
Services, including a multi year deal of $ 130 million. Looking ahead, for the quarter ending September 2007, we expect our Revenue from our Global IT services business to be approximately $ 777 million," Premji adds.