Wipro back on track, Q3 net profit up 27%, Q4 dollar guidance strong

Wipro today announced earnings in line with expectations and projected a better than expected outlook for the fourth quarter, signalling the company may be back on track after a few troubled quarters.

The company reported a 27 percent year on-year rise in net profit at Rs 2010 crore for the quarter ended December 31, 2013, while the company’s total income from operations during theDecember are up 18 percent year-on-year at Rs 11,327 crore.

The company’sQ3 IT services revenue grew 2.9 percent sequentially at $1,678.4 million. The company had guided for $1,660-1,690 million in revenue. tEarnings Before Interest and Tax (EBIT) came in at Rs 2380 crore ($384 million) for the quarter.

Operating margins met expectations at 23% for the quarter.

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Ankita Somani of Angel Broking said the company’s earnings came in line with the expectations.

“The earnings figures are encouraging. The company has been improving its performance quarter after quarter. Wipro’s turnaround story is now over and the company is getting back on track,” she told CNBC-TV18. She, however, doesn’t expect the stock to react majorly on Monday. There will be minor uptick, she said.

“As the global economy is progressing towards stability, we see optimism amongst clients, especially in the West. Corporations are leveraging technology to reduce operational costs and investing resources in differentiating themselves in the marketplace,” said Wipro chairman Azim Premji.

Wipro sees a Q4 dollar revenue guidance at $1.712-1.745 billion,including the revenues from the company’s acquisition, thus implying a growth of 2-4 percent.

" The 2-4 percent increase in dollar revenue projected by the company for the fourth quarter is also better than our estimates," said Somani on CNBC-TV18.

The company added 42 new customers in the third quarter and announced an interim dividend of Rs 3 per share.

“Our focus on account management has yielded encouraging results. We continue to execute to our strategy for superior engagement with clients while investing in emerging technologies to drive towards a higher growth trajectory. During the quarter, our Global Infrastructure Services business grew strongly on revenues,” said T K Kurien, Executive Director & Chief Executive Officer of Wipro.

As part of the turnaround plan, Wipro has identified 125 customers that it believes are the most important to its future. Deepening relations with these customers and growing them into larger accounts will be vital, Kurien had said earlier.