Wipro Disappoints, Provides Weak Guidance For Next Quarter Too

Wipro, the third-largest IT software company in India, has come up with a modest set of numbers for the June 2012 quarter and has provided muted guidance in line with that of Infosys. Against a guidance of USD 1,520-1,550 million, the company posted sales of USD 1,515 million for the quarter ended June. The net profit, on the other hand, increased from Rs 1,490 crore in June 2011 to Rs 1,580 crore as against the market expectation of Rs 1,595 crore. The dollar revenue growth of the company has grown by a mere 0.3 per cent QoQ, which has come below the company’s expectations. The stock on the BSE plummeted by 2.93 per cent yesterday to Rs 346 due to the weak revenue guidance.

In the IT sector, the leading players have come up with divergent results for the June quarter and guidance for the coming quarter as well as for the fiscal year 2013. Infosys has portrayed a weak picture for FY13 with further decline in guidance while TCS showed a stable outlook altogether. Infosys reduced the guidance to 5-6 per cent growth and TCS, on the other hand, said that it will be able to achieve NASSCOM’s revenue guidance of 11-14 per cent growth in FY13.

Moreover, in line with Infosys, Wipro has continued with its muted revenue guidance for the September quarter of between USD 1,520 million to USD 1,550 million. This is similar to the guidance given for the June quarter, implying that it’s going to be a flat September quarter. In terms of growth in verticals, only the manufacturing segment has seen a marginal growth of 0.5 per cent while all the other verticals have posted lower sequential revenues. Finance solutions, which accounts for over a quarter of its revenues, posted a 2 per cent QoQ decline, while retail and transportation revenues fell by 3.9 per cent.

Further, revenue from the American markets has fallen by 2.2 per cent while Europe has grown marginally by 0.3 per cent. The Asia-Pacific region, which accounts for 10.2 per cent of the company’s total sales, showed strong growth of 5.3 per cent.

Given the fact that both Infosys and Wipro have not shown any buoyancy in their results and guidance, the future prospects may seem to be a bit on the gloomy side.