The much-awaited financial results of Wipro’s Q3 FY’11 result were announced early morning today which have more or less met analysts’ forecasts.
Results of IT Services
The Bangalore-headquartered technology major while releasing its financial results under International Financial Reporting Standards (IFRS) has said that its IT Services Revenues, in dollar, terms were $1,344 million, a sequential increase of 5.6% and YoY increase of 19.3%. When translated into Indian rupees, the IT Services Revenues were up 15% Y-o-Y to Rs. 59.49 billion ($1,328 million).
Wipro’s IT Services Earnings Before Interest and Tax (EBIT) rose 8% y-o-y to Rs 13.21 billion ($295 million*).
However, the company’s margins at 22.8% was flat during the quarter over the immediate preceding September’10 quarter but was significantly lower than 23.7% reported a year ago. “The operating margins for IT Services business was flat, despite lower working days and drop in utilization,” said Suresh Senapaty, Executive Director & Chief Financial Officer, Wipro.
Also, price realization related to onsite projects was down by 3.6% Y-o-Y.
Further, Net Utilization (Excluding Trainees) was lower at 79.9% (Q3FY11) vs. 84.5% (Q3FY10), Y-o-Y.
Higher attrition rate (Voluntary TTM at 21.6% vs. 9.9%, Y-o-Y) too is a concern for the company.
In terms of verticals, Technology and Healthcare & Services saw de-growth of almost identical level of 3.5%
See Growth Metrics below:
Wipro Technologies Q3 2011 Analysis In terms of Geography, APAC and Other Emerging Markets grew the highest at 37.8% Y-o-Y. India & Middle East business saw a growth of 18.9% Y-o-Y.
In terms of Practices, Consulting business saw edged higher, clocking a growth of nearly 60% Y-o-Y, as compared to others.
The company’s IT Services business added 36 new clients during the third quarter ending December 31, 2010. There was also a net addition of 3,591 employees during the same quarter. The company also said that its Consumer Care and Lighting Revenues grew 21% while the EBIT grew 14%, y-o-y.
Wipro is a $6bn enterprise (based on consolidated revenues of FY'10) with major interests in Software Services Computer Hardware, Consumer Products, and Lighting Solutions. Wipro’s IT Services businesses accounted for 76% of its consolidated revenues during the just concluded third quarter (i.e., Q3FY11). The Bangalore-based firm is India’s third largest software exporter behind TCS and Infosys.
Results of Wipro Ltd. (Consolidated)
The company also said that its Consolidated Revenues (which include other businesses such as soaps and bulbs) were up 12% y-o-y to Rs. 78.29 billion ($1.75 billion*) while Consolidated PAT grew 10% y-o-y to 13.19 billion ($294 million*).
The company’s results were almost in line with analysts’ expectations. A CNBC-TV18 poll of brokerages had estimated consolidated net profit of Rs 13.18 billion and consolidated revenues of Rs 80.02 billion. However, some analysts felt that results were disappointing. “Wipro's third quarter results are below our expectation. Revenue growth was lower-than-expected, whereas PAT was in-line with our estimates. We expect the stock to see correction as results lack any positive surprise,” said a report from brokerage house.
Analysts have also expressed surprise at the change of guard at the firm’s IT Services. “The management rejig has made the investors cautious, as it is now a big responsibility for Kurien, who will alone handle the position held by two people earlier,” NDTV Profit quoted Geojit BNP Paribas Financial Services’ AVP Gaurang Shah as saying.
Highlights of the Results:
Results for the Quarter ended December 31, 2010
- IT Services Revenue in dollar terms was $1,344 million, a sequential increase of 5.6% and YoY
- Increase of 19.3%. Non-GAAP constant currency revenue was $1325 million.
- IT Services Revenues were Rs. 59.49 billion ($1,328 million1), representing an increase of 15% over the same period last year.
- Total Revenues were Rs. 78.29 billion ($1.75 billion1), representing an increase of 12% over the same period last year.
- Net Income was Rs. 13.19 billion ($294 million1), representing an increase of 10% over the same period last year.
- Non-GAAP Adjusted Net Income (excluding impact of accelerated amortization of stock based compensation) was Rs. 13.09 billion ($292 million1), representing an increase of 9% over the same period last year.
- IT Services Earnings Before Interest and Tax (EBIT) was Rs. 13.21 billion ($295 million1), representing an increase of 8% over the same period last year.
- IT Services added 36 new clients in the quarter.
- Net addition of 3,591 employees in the current quarter.
- Consumer Care and Lighting Revenue grew 21% over the same period last year and EBIT grew 14%.
- Wipro declares an interim dividend of `2 ($0.041) per share /ADS.
(Source: Wipro)
(*For the convenience of the reader, the amounts in Indian rupees in this release have been translated into United States dollars at the noon buying rate in New York City on December 30, 2010, for cable transfers in Indian rupees, as certified by the Federal Reserve Board of New York, which was US $1=Rs.44.80. However, the realized exchange rate in our IT Services business segment for the quarter ended December 31, 2010 was US$1=Rs.44.27)
However, the company surprised market by saying that Suresh Vaswani and Girish Paranjpe, the joint CEOs of IT Services, are stepping down and in place TK Kurien will be the new CEO of Wipro. Making the announcement Azim Premji, Wipro’s Chairman said, “The Joint CEO structure was one of the key factors that successfully helped us navigate the worst economic crisis of our times. With the change in environment, there is a need for a simpler organization structure. Kurien’s track record makes him uniquely positioned to lead Wipro through the next phase of growth.”
Wipro’s Q3FY11 performance lags bigger rivals TCS and Infosys. Earlier, TCS came out with better-than-expected Q3 numbers, bettering market estimates, and Infosys’ numbers although good yet disappointed the street.
In its Outlook for the Quarter ending March 31, 2011, the company said, “We expect Revenues from our IT Services business to be in the range of $1,384 million to $1,411 million, a sequential increase of 3% to 5%( based on the constant currency exchange rates: GBP/USD at 1.58, Euro/USD at 1.35, AUD/USD at 1.01, USD/INR at 44.98).
The shares of Wipro fell 4% in the morning trade after the announcement of the result.
No comments:
Post a Comment