Wipro Q2 net up 19% at Rs 1,161.7 cr

Software firm Wipro on Tuesday reported 18.76 per cent increase in its consolidated net profit at Rs 1,161.7 crore (Rs 11.61 billion) for the second quarter ended September 30, 2009.

The IT exporter had a net profit of Rs 978.2 crore (Rs 9.78 billion) in the September quarter of last fiscal, Wipro said in a filing to the Bombay Stock Exchange.

The total income of the company rose to Rs 7,057.4 crore (Rs 70.57 billion) during the July-September quarter of the current fiscal, from Rs 6,664.8 crore (Rs 66.64 billion) in the year-ago period, as per the Indian accounting norms.

"We see more stability in volumes and pricing as well as an improving demand environment. Our broad portfolio of services and strong delivery excellence continues to position us as a partner of choice with customers, as they focus on capital conservation and cost transformation," Wipro chairman Azim Premji said.

The country's third largest software exporter's revenue from IT services in rupee terms grew by 5 per cent to Rs 4,996 crore (Rs 49.96 billion) from the year-ago period. However, in dollar terms, the revenue fell by 4 per cent to $1,065.2 million.

"Looking ahead for the quarter ending December 31, 2009, we expect revenues from our IT Services business to be in the range of $1,092 million to $1,113 million," Premji said. In the reported quarter, the firm added 37 new clients to its IT services business, which accounted for 72 per cent of its total revenue.

"Margins for the IT services business stood at 23.8 per cent, an expansion of 143 bps (basis points) sequentially and 279 bps YoY," Wipro executive director and chief financial officer Suresh Senapaty said. At the end of the quarter the company's employee strength stood at 97,891.

On a stand alone basis, Wipro posted 44.52 per cent growth in net profit at Rs 1,232.1 crore (Rs 12.32 billion) for the September quarter.

The total income rose to Rs 5,979.2 crore (Rs 59.79 billion) during the period from Rs 5,551.6 crore (Rs 55.51 billion) in the year-ago period.

The scrip of Wipro has gained 59 per cent during the July-September quarter, outperforming the BSE IT index, which increased 39 per cent during the period.

Highlights of the Results

• Wipro Limited Revenue grew by 6% YoY to Rs. 6,917 crore (Rs 69.17 billion); profit after tax (PAT) grew by 19 per cent YoY to Rs. 1,162 crore (Rs 11.62 billion).
• IT services revenue at $1,065.2 million, a sequential growth of 3.2 per cent and YoY decline of 4 per cent.
•  IT services revenue in constant currency was $1,052.5 million, a sequential growth of 1.9%. On a constant currency basis, YoY decline was 1.6%.
•  In rupee terms, revenue for IT Services stood at Rs. 4,996 crore (Rs 49.96 billion), a YoY growth of 5 per cent and sequential growth of 3.5 per cent .
•  Profit Before Interest & Tax (PBIT) for IT Services segment was Rs 1,187 crore (Rs 11.87 billion), a growth of 19 per cent YoY.
• IT Services business added 37 new clients during the quarter.
• IT Products business recorded 18 per cent YoY growth in Revenues and 39 per cent YoY growth in PBIT.
• Wipro Consumer Care and Lighting business Revenue grew 11% YoY and PBIT grew 13 per cent YoY.

Wipro's IT business

Wipro has entered into a multi-year agreement with a leading global pharmaceutical company. Wipro will provide end-to-end infrastructure management (IM) including end-user computing services, networks and security services, data& centre services, asset management and service desk support.

The provision of global support will span across North America, Latin America, East and West Europe and Asia covering 38 countries and 110 locations.

Wipro has entered into a multi-year contract with an iconic beverage company based in Australia for managing, supporting and provisioning the customer's IT infrastructure, data centers, providing Disaster Recovery Services and support of different business applications across Australia, US and Europe.

Wipro will use its delivery centers across the globe for rendering these services. Wipro Technologies has entered into a 5 year agreement with BP to provide IT Applications Development and Maintenance (ADAM) services for BP's Fuels Value Chain and Corporate businesses globally.

BP has undertaken a programme to consolidate its IT ADAM vendors and Wipro has been selected as a strategic partner after a rigorous selection procedure which assessed the IT major on its IT capabilities, domain knowledge of the oil and gas sector and proven past record of operational transformation for customers.

Wipro will take over the global responsibility for providing Nokia Siemens Networks with application management services for SAP, delivery, marketing and sales, and product data management applications.

In addition, over 50 employees are planned to transfer to Wipro. The India & Middle East geography saw some marquee wins and multi-year deals being signed in this quarter.

Wipro and Lavasa entered into a partnership for planning, implementing and managing Information & Communication Technology services across Lavasa city.

The strategic partnership is intended to focus on providing integrated and effective solutions for enhancing IT operations within the Hill city. Wipro entered into a 10 year total outsourcing agreement with Delhi International Airport Limited (DIAL) to provide world class IT Infrastructure and Services for Indira Gandhi International Airport (IGIA), New Delhi.

The total outsourcing engagement will deliver business IT alignment for DIAL by combining leading airport solutions with Wipro's strong practices of governance, process excellence and integrated service delivery.

Wipro is responsible for complete IT management in Terminal 3 of IGIA and will deliver seamless and highly available airport IT operations.

Awards and Recognition

Wipro was a winner in the 2009 ASTD (American Society of Training and Development) BEST Awards Competition. Wipro has the unique distinction of having won this award for a sixth year in succession. For this achievement, Wipro has been honoured with an exclusive recognition in a logo which says "ASTD Best Award Winner, 2004-2009"

Wipro figured in the joint second position in the list of Top 5 Green Electronics Brand as per the latest edition of the Greenpeace Guide to Greener Electronics, because of our strong focus on e-waste management and climate control.

Wipro's website was awarded the WebAward "For Outstanding Achievement in Web Development" under the category - Consulting Standard of Excellence by Web Marketing Association.

Wipro won the 2009 Asian MAKE awards. The panel recognized Wipro Technologies for enterprise knowledge sharing and collaboration. Wipro Technologies is a seven-time Asian MAKE Winner.

Reinforcing its position as the largest third party R&D services provider in the world, Wipro was named the No.1 service provider in a comprehensive ranking titled "Global R&D Service Providers' Rating", by Zinnov Management Consulting Pvt. Ltd, a leading management consulting firm.

Wipro was also rated for the first time by Standard & Poor's Rating Services. S&P has assigned Wipro an investment grade rating of "BBB" with a stable outlook, which is higher than India's sovereign rating.

This rating was announced by S&P in a press release dated Oct 26, 2009. S&P on assigning the rating cited Wipro's modest financial risk profile, superior cost efficiency, and business and customer diversity in its IT business as its key strengths.

Analyst References

Wipro was rated 'Positive' in the Market Scope for SOA Consulting and System Integration services, North America in the recently published report by Gartner Inc. (July 31, 2009).

This Market Scope assessed 13 consulting and system integration service providers on their service-oriented architecture capabilities in North America. Evaluation criteria include customer experience, market understanding, product/services, market presence and innovation.

Taking its innovation agenda forward, Wipro partnered with Knowledge@Wharton to launch a Global Innovation Tournament. The objective of this unique tournament is to select the best and the most innovative technology-based tools that have the ability to help companies gain a competitive advantage by increasing revenues, cutting costs and improving customer experience.

IT Products

For the quarter ended September 30, 2009, IT products business recorded revenues of Rs 1183 crore (Rs 11.83 billion) billion, representing a growth of 18 per cent YoY. The PBIT grew by 39 per cent YoY to Rs 59.7 crore (Rs 597 million). The operating income to revenue for the quarter was 5 per cent.

IT products business accounted for 17 per cent of the revenue and 5 per cent of the PBIT for the quarter ended September 30, 2009.

For the quarter ended September 30, 2009, our Consumer Care and Lighting business recorded Revenues of Rs 587 crore (Rs 5.87 billion), a growth of 11 per cent YoY and PBIT of Rs 72.5 crore (Rs 725 million), a growth of 13 per cent YoY. The PBIT to revenue was 12.4 per cent for the quarter.

Wipro GE HealthCare

Wipro GE Healthcare, the joint venture between Wipro Ltd. and GE Healthcare, integrated several existing stand-alone business units and manufacturing plants of GE Healthcare in India under the Wipro GE Healthcare entity.

This strategic move will lead to more effective management and resource utilisation and help accelerate growth for GE Healthcare, the $17 billion healthcare business of General Electric Company through Wipro

GE Healthcare's large distribution network. With the growing demand for health care in India and South Asia, this move will define the next stage of market leadership for the entity.