BANGALORE: Wipro Ltd , India's No. 3 software services exporter, on Wednesday said fourth-quarter profit rose nearly 14 percent, in line with estimates, and said revenue from IT services could grow in the first quarter on strong demand for outsourced services.
Earlier this month, larger rival Tata Consultancy Services beat profit estimates but said wage hikes and currency moves could threaten its full-year margins while No. 2 Infosys forecast lower-than-expected annual sales growth on slower client spending.
Bangalore-based Wipro forecast IT services revenue of $1.39 billion to $1.42 billion in the fiscal first quarter, which reflects a decline of 0.4 percent at the low end to a rise of 1.6 percent at the top end when compared to the fiscal fourth quarter that ended March 31.
Wipro said its forecast was based on an exchange rate of 44.29 rupees to a dollar.
"I am disappointed by their guidance. They have forecast flattish growth in the first quarter compared to expectations of about 2.5 to 3 percent growth," said Shradha Agarwal, a sector analyst with Batlivala & Karnani Securities in Mumbai.
"It will make the task of matching the growth rates of rivals tougher for them."
Bangalore-based Wipro said net profit for the fiscal fourth quarter rose to 13.75 billion rupees ($309 million) under international accounting standards from 12.09 billion a year ago.
This compares with a Reuters poll forecast of 13.79 billion rupees for Mumbai and New York-listed Wipro , which counts Citigroup , Cisco and Credit Suisse among its clients.
Wipro said it added 68 clients in the quarter, while adding 2,894 employees. Operating margins in its IT services business were 22.1 percent in the quarter.
Wipro's IT business, which develops software applications, integrates IT systems and manages call centres for clients such as Citi , Cisco and Credit Suisse , accounts for about three-quarters of its revenue.
Intensifying competition from global rivals IBM and Accenture has forced Indian technology firms to hike wages, seen as much as 15 percent higher this year.
"We have announced wage hikes, effective June 1, 2011, which would have an impact on the operating margins," Chief Financial Officer Suresh Senapaty said in a statement. No details on the wage hike were immediately available.
TCS has said it planned to raise wages 12 to 14 percent for India-based staff this fiscal year. Infosys has said it would raise wages by 10 to 12 percent for India-based staff.
The rupee's rise is another concern for the near $60-billion outsourcing sector, which exports a large chunk of its services to the United States but chalks up expenses in rupees.
Mumbai- and New York-listed Wipro in February reorganized its key IT outsourcing business in an effort to win more clients, barely three weeks after it surprised markets by removing the joint chiefs of the business and naming company veteran T.K. Kurien as the new chief executive.
Wipro has been struggling to keep up with sector leaders TCS and Infosys in winning large outsourcing contracts.
Wipro shares, which the market values at about $26 billion, have fallen 5.4 percent this year, compared with a 9 percent fall in the sector index and the wider market's 4.3 percent loss.
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