Buoyed by the sharp depreciation of the rupee, Wipro, on Tuesday, reported its highest revenue growth in seven quarters, during the 90-day period that ended on September 30. It earned revenues of Rs.10,992 crore during the quarter, 19 per cent higher than a year earlier. The company announced a net profit of Rs.1,932 crore, 28 per cent higher than in the same quarter of the previous year. In dollar terms, revenues from IT services amounted to $1.661 billion during the quarter, 5.9 per cent higher on a year-ago basis. The rupee’s steep decline during the quarter meant that rupee-denominated revenues from IT services, the mainstay of the company, increase of 20 per cent on an annual basis, reaching Rs.10,068 crore.
Asked if the performance during the quarter signalled a turning point in the company’s fortunes, Executive Director and CEO T. K. Kurien said, “We have done well this quarter, but there is plenty of work to do.” Mr. Kurien indicated that the rupee’s appreciation during the current quarter may in relatively more subdued gains for the company in the current quarter.
Operating margins were 22.5 per cent during the quarter, an improvement of 180 basis points over the second quarter of 2012-13. Margins during the quarter were the highest in the last five trailing quarters.
Wipro projected revenues to range between $1.66 billion and $1.69 billion in the third quarter. On an annualised basis, this translates to a growth of between 5.25 per cent and 7.15 per cent.
Suresh Senapaty, Chief Financial Officer, admitted that the company enjoyed ‘currency benefits’ during the quarter, but refused to provide an estimate of how much of the increased margins came from fortuitous currency movements. He claimed that improved “operational efficiencies” drove growth during the quarter.
Non-linear growth
Asked if the company faced pricing pressures, Mr. Kurien said ‘commoditised’ service lines might feel the pressure, but that the company was shifting its focus to areas such as consulting, which were more immune to pricing pressures.
Asked to explain the marginal reduction in head count — when compared to the preceding quarter — Pratik Kumar, Exective Vice-President (Human Resources), said the reduction reflected Wipro’s focus on ‘non-linear growth’. Mr. Kurien said about 60 per cent of the company’s total cost was attributable to personnel costs.
