Wipro profit beats forecast at Rs.1301 cr

BANGALORE, INDIA: Wipro Ltd, country's No. 3 software services exporter, on Monday posted a 1 per cent rise in quarterly profit, beating street estimates, helped by a weaker rupee and rise in spending on outsourcing by overseas clients.

Bangalore-based Wipro forecast third-quarter revenue of $ 1.50 billion to $ 1.53 billion from its IT services unit, which accounts for three-quarters of its total revenue, a rise of 2 per cent to 4.1 per cent from the second quarter.

Country's showpiece $76 billion industry gets more than 90 per cent of its revenue from providing technology services to overseas clients and counts the United States and Europe as its biggest markets.

Europe is the second largest market for the software firms, and the euro zone debt crisis is a worry for the sector that has been looking to increase its sales to the region to hedge against their excessive exposure to the United States.

"Macroeconomic sentiments continue to remain uncertain," Wipro's billionaire Chairman Azim Premji said in a statement. "(But) we have seen growth momentum build up in our IT business with healthy volume growth."

Wipro , also listed on the New York Stock Exchange, has been lagging its bigger rivals in earnings growth in recent quarters that led to a reorganisation of its key IT outsourcing business earlier this year.

As part of the restructuring, the company removed the joint chiefs of the IT business and named company veteran T K Kurien as the new chief executive.

Outsourcing services firms including Wipro are also facing fierce competition from bigger global rivals including IBM and Accenture.

Wipro, which develops software applications, integrates IT systems and manages call centres, said net profit in the quarter rose to Rs 1301 crore ($267 million) under international accounting standards from Rs 1285 crore, a year ago.

Total revenue rose 18 per cent to Rs 9094 crore, as the company added 44 new clients in its IT services business.

This compares with a media poll forecast of Rs 1276 crore on net sales of Rs 8928 crore for the company, which counts Citigroup, Cisco and Credit Suisse among its clients. Top software exporter Tata Consultancy Services Ltd posted a slightly lower-than-expected rise in quarterly profit earlier this month, while No. 2 Infosys met street forecasts in its earnings.

The top two outsourcing companies, however, sounded caution about the business outlook in the near-term due to the global economic uncertainty.

Wipro's shares, valued at about $18.30 billion, have fallen nearly 24 per cent this year, compared with a 16 per cent drop in the sector index and a 12.6 per cent fall in the Mumbai index.