Wipro Ltd, India's third-largest exporter of software, reported a 31 percent jump in quarterly profit on Friday, but it fell short of forecasts as a strong rupee, sales expenses, and US visa costs hurt margins. A restructuring of its back-office business, hit by cut-throat competition in call centres, also eroded profits for Wipro, which followed industry leaders Tata Consultancy and Infosys and No 4 player Satyam in missing estimates.
"The numbers are disappointing," said Rajiv Mehta, analyst at India Infoline.
"It does not look great going ahead. The margin pressure is spoiling the outlook of the company because in September they increase the salaries and I expect greater margin pressure."
The company's shares slipped 3 percent early, but bounced back as the Bombay market scaled a new all-time high.
Chief Financial Officer Suresh Senapaty said profit margins in the near future would move in a narrow range and prices would remain stable as Wipro increases efficiency and does more higher margin business in software and back-office services. New deals were coming in at higher prices, he said in an interview.
Senapaty saw no significant business impact from China's yuan revaluation, which took the rupee to a six-year high. But he said later he expected the rupee to appreciate over the medium term.
Chairman Azim Premji, India's wealthiest man with an 84 percent stake in $12 billion Wipro, said profitable consulting work and hiring more recent graduates would help sustain margins.
"There is significant scope for elevating operational excellence," he told a news conference."
"I am not saying we will go back to the 27 percent margin but we are confident that we'll be on top of the situation fast."
Bangalore-based Wipro, which develops software for telecoms and microchips, said revenue from the global IT services business would rise 5.9 percent to $422 million in its second quarter to September from $398.5 million in April-June.
Comments
Comments are closed.