Wipro, on Friday, reported a 24 per cent rise (year-on-year) in net profit at Rs.1,611 crore for the second quarter ending September 30, 2012.

Overall net revenues also improved by 17 per cent to Rs. 10,657 crore.

IT services operations

Revenues from IT services operations, which accounted for almost four-fifths of Wipro’s overall revenues in the second quarter, amounted to $1.541 billion, which was within the guidance range it had set at the end of the last quarter.

Revenues in dollar terms were higher by 4.6 per cent. However, rupee-denominated revenues from IT services amounted to Rs.8,373 crore, an increase of 23 per cent on an annualised basis.

Wipro expects IT services revenues in the third quarter to be in the $1.56 billion to 1.59 billion range, an increase ranging between 1.2 per cent and 3.2 per cent over the second quarter revenues.

Commenting on the results, Chairman Azim Premji said, “It is a decent quarter, even if not great.”

“We have met the mid-point of the guidance range we had provided,” Mr. Premji remarked.

He said he expected ‘the softness’ in the Indian market to improve, following the implementation of economic reforms.

T.K. Kurien, Executive Director and CEO of the company’s IT business, said the impetus to growth during the quarter came from energy, natural resources and retail banking, even though the investment banking segment “continued to remain a drag.”

Employee attrition

Employee attrition during the quarter was ‘low’ at 14.5 per cent, he observed.

Mr. Kurien attributed the 1.9 per cent improvement in price realisation to the pursuit of “outcome-based contracts” with clients. He said the company had adopted a strategy that hinged on the “creation of advanced technology service lines,” mainly focused on cloud, analytics and mobility. “Meanwhile, we have also focused on standardisation to improve productivity within the company,” he added.

Operating margins of the IT services business declined by 30 basis points when compared to the previous quarter, touching 20.7 per cent. Company sources attributed the dip to the wage increases effective from June. The company acquired 53 new customers during the quarter. It acquired one customer in the $100 million group, and one in the $75 million group.

Mr. Kurien said revenues from the top ten customers grew 8.2 per cent during the quarter.

Asked if he expected demand in the U.S. market, which accounted for about half of Wipro’s services market, to improve after the elections, Mr. Kurien said, “We expect growth to come back in the second quarter, if not the first. ”

“We are moderately and cautiously optimistic,” Mr. Premji added.

Revenues from IT products amounted to Rs.899 crore, down 10 per cent on an annualised basis.

Revenues from the consumer care and lighting segment amounted to Rs.1,008 crore, 26 per cent higher than a year ago.

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