Wipro lags St with 6% fall in Q1 profit

Continuing its gloomy streak, Wipro, India’s third largest software services provider, on Friday reported a 6% on-year fall in net profit to Rs 1,623 crore for the first quarter (Q1, April-June).

Not only was Wipro’s profit lower than analysts’ estimates, it lagged rivals Infosys and TCS whose Q1 profits rose by 3% and 16% respectively.

Wipro’s revenues were also lower-than-expected at Rs 9,735 crore, down 1.3% on-year. Prior to the results, analysts expected Wipro to post a profit of Rs 1,640 crore on revenues of Rs 9,917 crore.

However, Wipro’s IT services revenues was up 7% on-year to Rs 8,936 crore – or $1.59 billion, up 0.2% sequentially and 5% on-year.

Operating profit margins were up 20% at Rs 1,785 crore, again lower than analysts’ expectation of Rs 1,827 crore.

Suresh Senapathy, CFO, Wipro, blamed it all on wage hikes given out during the quarter and the $16 million impact of cross-currency headwinds. However, Senapathy said he does not see any short-term changes to Wipro’s hedging position.

However, the company guided  IT services revenue in the range of $1.62-1.65 billion for Q2. This comes on the back of projected double-digit growth from the US in the next few quarters.

The company added 28 new customers in Q1. Employee strength in the IT services business increased by 1,469 people to over 1.47 lakh.