Wipro’s Q3 Results Surprise Markets, Stock Lower On Profit Booking

Wipro announced its results for the quarter ending Dec 31, 2012 earlier today (Jan 18, 2013). Like those of its industry peers, Wipro’s results have beat the street’s expectations, improving the overall sentiment around the Indian IT industry. Yesterday (Jan 17, 2012), the company’s share prices ended the day higher by 2.63% at Rs 431.10 apiece. However, today its shares are trading lower by 3.73%, probably having discounted yesterday’s gains.

The sequential growth reported in the topline (IT Services Revenue) was 2.4% at USD 1.577 billion. The operating margin grew by 10 basis points to 20.8%. However, the net profit margin saw a larger boost on account of a lower tax rate. While the tax rate in Q2FY13 was 23.9%, this was seen at 21.9% for Q3FY13. With this, the consolidated net profit was up sequentially by 6.5% to Rs 1716 crore.

Higher growth was seen in the verticals of Healthcare, Life Sciences & Services (7.1%) and Retail & Transportation (3.1%), which together contribute to 25% of Wipro’s revenues. Europe has been seeing significant traction in all the results announced so far. For Wipro, the revenues from Europe grew by 7.5% on a sequential basis.

The company added 50 new customers in the quarter under review and saw an addition of 2336 employees. Wipro saw a decline in its utilisation levels this quarter. The net utilisation (excluding trainees) came to 74.8% in Q3FY13 from 77.9% in Q2FY13.

Overall, the result of Wipro has been better than expected, especially considering the outlook for the IT industry.