Wipro Ltd’s numbers for the September quarter, announced on Tuesday, were in line with those of its bigger peers Tata Consultancy Services (TCS) and Infosys, as it beat street expectations and its own guidance.
The company saw IT services revenue in dollar terms grow 3.2% to $1,065.2 million, higher than its guidance of $1,030 million.
Net profit margins for the IT services business improved 143 basis points (bps) sequentially and by 268 bps year on year.
Girish Paranjpe, joint chief executive officer (CEO) of Wipro Technologies, attributed the margin expansion to improvement in operational parameters such as productivity, price realisation and cross currency gains.
“The better price realisation is because there was an increase in the number of billable headcount in the second quarter compared with the first quarter. Also, we were able to retain some of the productivity gains in the fixed price projects that are outcome based,” he said.
Growth in IT services revenues was led by higher pricing and more revenues from fixed price projects. Even as volumes have declined 1.5%, onsite price increased 4.7% and offshore by 3.4%.
Pricing was driven by higher realisation on account of higher proportion of fixed price projects along with cross currency gains, better productivity and non-linear outcome based projects.
However, going forward, Paranjpe said the company would depend on volume for growth. “We will focus much more on volume growth in the coming quarter. We moved quite well in operating parameters,” he said.
Azim Premji, chairman of Wipro, is projecting revenues from IT services business in Q3 to be in the range of $1,092 million-$1,113 million, an increase of 2.5-4.5%.
Paranjpe said his company was bullish about the coming quarters because of uptick in organic growth in the deals from existing clients.
“We are seeing our existing account organic growth pick up. It (growth in business from existing customers) was kind of slow earlier but the pace of growth has improved. Existing projects, which were not getting approved, are now getting approved. That’s the reason why we are feeling more confident,” Paranjpe said.
The third-largest IT services company saw its stock increase 2.1% on Tuesday to Rs 604.15 even as the BSE Sensex closed the day 2.3% lower.
Consolidated revenues of Wipro grew 10.2% over the June quarter to Rs 6,917.2 crore. Revenues from IT services, which accounted for 72.2% of total revenues, increased 3.5%.
Rivals TCS and Infosys too posted better than estimated results for the quarter.
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