Wipro Q4 profits up 55%

BANGALORE: Wipro Ltd quarterly profit rose a better-than-expected 55 per cent and forecast stable growth, as India's third-largest software services company benefited from overseas clients turning to cheaper outsourcing.

It also announced a two-for-one stock split by issue of bonus shares. Wipro, which counts Nortel Networks and Cisco Systems among its about 300 clients, had been expected to show stable billing rates in a reviving market, underscoring solid demand for India's outsourcing industry.

The results came after Infosys Technologies Ltd, the No. 2 sector player after privately held Tata Consultancy Services, posted a 31 percent rise in quarterly profit but forecast slower growth for this year due to higher salaries and a rising rupee.

Bangalore-based Wipro reported a net profit of Rs 325 crore ($73.9 million) or 14.07 rupees per share, in the fiscal fourth quarter ended March 31, according to U.S. accounting standards. That compared with a profit of Rs 210 crore in the year-ago period.

Sales at the Bangalore-based company rose a better-than-expected 43.5 percent to Rs1761 crore on the year.

A Reuters poll of 17 analysts had estimated New York Stock Exchange-listed Wipro, which also has minor interests in consumer products, to report a median net profit of Rs296 crore on revenue of Rs1671 crore.

Mid-sized MphasiS disappointed markets with a lower-than-expected rise in quarterly profit rise as a strong currency hit earnings growth.

Suresh Senapaty, corporate executive vice-president, finance, said in a statement that better pricing, operational improvements and hedging strategies helped mitigate the rupee's rise against the dollar and add to the margins in the global IT business.

The Indian rupee had gained 4.4 percent in the past quarter.

Global giants including Accenture Ltd and IBM Corp, are expanding furiously in India taking advantage of low-cost, English speaking workers and fuelling a rise in wages which are expected to go up by at least 10-15 percent this year.

"These are a superb set of numbers and they have exceeded revenue by a big margin. I think the rebound in telecom (business), to which Wipro has a huge exposure, has helped the company to achieve this performance," said Chetan Shah, analyst at Quantum Securities.

Wipro does not make full-year earnings forecast but gives quarterly estimates and comments on pricing and margin issues.

The firm which reported $289 million revenue from its global IT business, far exceeding its own forecast of $269 million, said it saw the revenue from this business at $292 million in the current quarter to June.

Wipro is leading a pack of Indian companies betting on back-office services and large outsourcing deals to boost growth, aided by its string of acquisitions in the past two years, but profits have been hit by acquisition costs.

Shares of Wipro, which employs 28,502 people, have fallen 9.0 percent in the past three months in line with a nearly ten percent decline in Bombay's infotech index and a six percent loss in the broader 30-share index.

Wipro is 84 percent-owned by Chairman Azim Premji, who took over his family-run edible oils firm nearly four decades ago and transformed it into a software giant. The firm also makes computer hardware and consumer care products but its software services division makes up about 75 percent of revenue. ($1 = 43.98 Indian rupees)

© Reuters