Wipro rides on dollar terms to beat rising rupee

BANGALORE, INDIA: A robust year-on-year revenue growth of 35 per cent in dollar terms by Wipro's IT division helped the Indian IT major to withstand the strong rupee and protect its operating and net margins during the first quarter of the financial year 2007-'08.

This growth in revenue in dollar terms ($726 million) also enabled the third largest Indian IT firm to beat the guidance of $711 million. However, the rising rupee impacted the firm’s operating margin by 250 basic points (2.5 per cent) in the first quarter.

Announcing the first quarter results, Wipro chairman Azim H Premji said that the firm's IT services business continued to witness broad based growth, across verticals, geographies and service lines in dollar terms. “A surging rupee during the quarter, however, pegged the growth in rupee terms to 20 per cent (Rs 295 crore) YoY."

Suresh Senapaty, chief financial officer of Wipro, admitted that a strong rupee affected the company’s margins. He added that operational improvements helped the company to partially offset the pressure on profitability arising out of rupee appreciation and limited the decline in operating margin by 250 basis points on quarter-on-quarter basis.

Wipro’s net profit grew 17 per cent YoY to Rs 726 crore and total revenue by 34 per cent YoY to Rs 420 crore under the Indian GAAP.

Under the US GAAP, the net income increased by 16 per cent YoY to $175 million and top line revenue by 34 per cent YoY to $1.03 billion.

In India, Middle East and the Asia-Pacific region, IT services and products business recorded a 62 per cent revenue growth to Rs 750 crore from Rs 460 crore in the corresponding period the previous year under the Indian GAAP and by 51 per cent under the US GAAP.

"The revenue growth was primarily driven by strong volume growth across our business units. Technology infrastructure services and package implementation grew by about 50 per cent, while business process outsourcing and testing services by over 40 per cent,” Premji informed.

Finance solutions, telecom service providers, manufacturing and technology media, transportation and service verticals also registered strong growth.