IT services major Wipro, on Thursday, announced that its net profit for the fourth quarter grew by 28.8 per cent to Rs. 2,226.5 crore,, while the significant IT services segment grew in revenue by 18 per cent in rupee terms.
However, despite a very optimistic picture the company painted in terms of deal wins in a quarter where they booked the “highest orders ever”, Wipro has announced a muted guidance for the upcoming quarter. The company, which does not announce annual revenue guidance, said that it expects revenues from IT services business to be in the range of $1,715 -1,755 million. Given IT services revenues for the current quarter are at $1,720 million, Wipro, at the lower end of this guidance, will see IT services revenues lower sequentially by 0.3 per cent and at 2.03 per cent at the higher-end.
The quarterly guidance stood in contrast with the company’s optimism for the full year, as well as the achievements it announced for the quarter. Wipro CEO T.K. Kurien attributed the guidance to “purely seasonal factors at play” and insisted that the guidance for Q1 “not be read as precursor to the full year.” He said that the company would better its performance in 2014-15, despite a lull in the first quarter of the year.
For 2013-14, Wipro’s profit rose 17.5 per cent to Rs. 7,796.7 crore and revenue grew 16.1 per cent to Rs. 43,754.9 crore.
The “seasonality” was fully attributed to the India business, where government contracts are bound to see a lag in implementation in Q1 after budgets are announced at the end of the previous fiscal. “The current quarter (ending March) was good for us and once the seasonality of Q1 is behind us, we expect the momentum to continue,” he said. The seasonality, however, is restricted to India, which along with the Middle East, accounts for just 8.6 per cent of the business. Geographically, the company has seen strong traction in North America and continental Europe.
Mr. Kurien said that some businesses added in the previous quarter would only see implementation towards the end of the first quarter, and revenues from these would start making an impact only in the subsequent quarter. He added that the company had seen a reduction in the retail vertical.
Operating margins peak
The company reported an expansion in operating margins by 150 basis points to 24.5 per cent. This, Mr. T.K. Kurien said, was the highest operating margin in three years.
Attrition and hiring
The company saw an annual attrition of 15.1 per cent, up from 13.7 per cent. However, the company maintained it was “comfortable” at these levels with employee gross utilization at 66.1 per cent. Interestingly, the company saw an annual net addition of just 241 employees, far behind its industry peers.