Wipro's result: Sales and profit increased

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Wipro's result: Sales and profit increased
Wipro: Quotes, News
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Wipro, India's third largest software company, reported its quarterly result with a net profit of Rs 1337.6 crore for the fourth-quarter of FY11. This was an increase of 9.31% quarter-on-quarter (over the previous quarter), and when compared to the same quarter over previous year, the increase was 8.16% (year-on-year).

The company's revenues went up by 8.8% q-o-q, and 16.89% y-o-y. Compared to this Wipro's expenditure went up faster, it reported as it increased by 8.91% q-o-q and the same went up by 19.81% y-o-y. Other income was a saviour for the day, as it had increased to Rs 210.7 crore 28.32% q-o-q. The company's net profit margin went up by 150 basis points to 18.63%. The net profit margin of Wipro is still way below TCS (26.97%) and even if Infosys (25.94%).

Wipro's result reaffirmed the trend as stated by TCS, Accenture and IBM, expenditure on information technology by companies is increasing. Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said - “The business environment is positive and we are focusing on growth by directing investments on momentum verticals. We have announced wage hikes effective June 1, 2011, which would have an impact on the operating margins."

On the front of annual results, sales of Wipro increased by 13.65% over previous fiscal year 2010 (FY10) to Rs 26340.7 in FY11. Expenditure went up by 17.9%, other income increased to Rs 640.5. Net profit fell by -1.11%. Annual net profit margin fell by 2.74 percentage points.

Azim Premji, Chairman of Wipro, commenting on the results said - “We have made good progress in creating a leaner, simpler and more customer centric organization structure. We believe our business strategy along with the new structure will deliver industry leading growth."

Wipro added 2,894 employees at its technology unit last quarter and ended the fiscal year with 122,385 workers, according to the official statement issued by the company.

Revenue from the company"s information-technology services business was Rs 3,691 crore for the quarter. Wipro also has division that is in manufacturing of soaps and lighting equipment.

In its outlook for the quarter ending June 30, 2011, Wipro stated that business may range between $1.39 billion and $1.42 billion.

Our View

Although the company's result showed increased in sales and net profit, but margins have been under pressure. This is a matter of concern, especially when TCS has a margin which is nearly 9 percentage points more than Wipro. And the company's outlook on June quarter's result is not encouraging. 

OneIndia Money

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