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Wipro outlook disappoints, shares down

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CIOL Bureau
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BANGALORE, INDIA: India's Wipro Ltd on Wednesday forecast muted growth for its mainstay information technology services business and said wage hikes would hurt operating margins this year, sending its shares down by nearly four per cent in early trade.

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At 10.23 p.m IST, Wipro shares were down 3.52 per cent at Rs. 447.65.

Wipro, India's No. 3 software services exporter, has been struggling to win large outsourcing contracts amid intense competition with local and global rivals such as Tata Consultancy Services (TCS) and IBM .

Bangalore-based Wipro, which met forecasts with a 14 per cent rise in fourth-quarter net profit, said it expected IT services revenue of $1.39 billion to $1.42 billion in the fiscal first quarter. However, Suresh Senapaty, executive director and chief financial officer of Wipro, said wage hikes would hurt operating margins.

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Earlier this month, India's No.1 outsourcing firm TCS beat net profit estimates but said wage hikes and currency moves could threaten its full-year margins while No. 2 Infosys forecast lower-than-expected annual sales growth on slower client spending.

Wage hike and rupee's rise are the major concerns for the near $60-billion outsourcing sector in the country, which exports a large chunk of its services to the United States but chalks up expenses in rupees.

Wipro said its IT revenue forecast was based on an exchange rate of 44.29 rupees to a dollar, in line with current rates.

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Wipro's net profit for the fiscal fourth quarter, which rose to Rs. 1,375 crore ($309 million) from Rs. 12.09 crore a year ago, compares with a Reuters poll forecast of Rs. 1379 crore.

The firm said revenue rose 18 per cent YoY to Rs. 8,302 crore, compared with a forecast of Rs. 8,254 crore.

Wipro stock, which the market values at about $26 billion, have fallen 5.4 per cent this year, compared with a 9 per cent fall in the sector index and the wider market's 4.3 percent loss.

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