Wipro IT chiefs quit; Q3 net up 10%

Wipro's third quarter reports were announced on Friday along with resignations of the joint-chief executive officers of its information technology business.

Wipro said T K Kurien will replace Girish Paranjpe and Suresh Vaswani as chief executive officer of the IT business, a move that is aimed at simplifying its organisational structure.

Paranjpe and Vaswani, current joint CEOs of the IT business, will step down on February 1, 2011. Kurien will lead Wipro's IT business and will also be on the company's board as executive director.

India's third biggest IT company reported a 9.60 per cent increase in consolidated net profit at Rs 1,318.8 crore (Rs 13.18 billion) for the third quarter ended December 31, 2010.

The company had a net profit of Rs 1,203.2 crore (Rs 12.03 billion) in the corresponding quarter of the previous fiscal, Wipro said in a filing to the Bombay Stock Exchange.

For the fourth quarter ending March 31, Wipro expects revenues from IT services business to be in the range of $1,384-1,411 million, a sequential increase of 3 to 5 per cent, the filing added.

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"We announced the appointment of T K Kurien as the chief executive officer of IT business and executive director, Wipro with effect from February 1, 2011.

"The joint CEO structure was one of the key factors that successfully helped us navigate the worst economic crisis of our times," Wipro chairman Azim Premji said.

Net income from sales rose to Rs 7,829.3 crore (Rs 78.29 billion) for the December quarter as against Rs 6,977.4 crore (Rs 69.77 billion) in Q3 FY10, it said.

The board of directors have proposed an interim dividend of Rs 2 per equity share on the face value of Rs 2 to its shareholders.

IT services business, which contributed 76 per cent of the total revenue during the reporting quarter, added 36 new clients, the company said.

"The operating margins for IT Services Business was flat, despite lower working days and drop in utilisation," Wipro executive director & chief financial officer Suresh Senapaty said.

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The company's IT services revenue grew by 15 per cent at Rs 7,829 crore (Rs 78.29 billion), over the same period last year.

The company added 3,591 net employees in this quarter taking the total head count to 119,000 employees as of December 31.

It had cash and cash equivalents to the tune of Rs 6,487.8 crore (Rs 64.87 billion) as on December 31, 2010.

On standalone basis, Wipro posted a marginal dip in net profit at Rs 1,223.7 crore for the reported quarter. It had a net profit of Rs 1,231.2 crore in Q3 FY'10.

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Here are the highlights:

• IT services revenue in dollar terms was $1,344 million, a sequential increase of 5.6 per cent and YoY increase of 19.3 per cent.
• Non-GAAP constant currency revenue was $1325 million. IT Services Revenues were Rs. 59.49 billion ($1,328 million(1)), representing an increase of 15 per cent over the same period last year.
• Total Revenues were Rs. 78.29 billion ($1.75 billion(1)), representing an increase of 12 per cent over the same period last year.
• Net Income was Rs. 13.19 billion ($294 million(1)), representing an increase of 10 per cent over the same period last year.

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• Non-GAAP Adjusted Net Income (excluding impact of accelerated amortization of stock based compensation) was Rs. 13.09 billion ($292 million(1)), representing an increase of 9 per cent over the same period last year.
• IT Services Earnings before interest and tax was Rs.13.21 billion ($295 million(1)), representing an increase of 8 per cent over the same period last year.
• IT Services added 36 new clients in the quarter.
  There has been a net addition of 3,591 employees in the current quarter.
• Consumer care and lighting revenue grew 21 per cent over the same period last year and EBIT grew 14 per cent.
• Wipro declares an interim dividend of Rs 2 ($0.04(1)) per share /ADS.

Wipro numbers lag behind TCS, Infosys: Experts

Wipro's third quarter numbers failed to lift investors' sentiments, as they did not bring any 'positive surprise', according to analysts. IT major

"Wipro's third quarter results are below our expectation. Revenue growth was lower-than-expected, whereas PAT was in-line with our estimates. We expect the stock to see correction as results lack any positive surprise," brokerage firm Prabhudas Lilladher said in a report.

Reacting to the lower-than-expected quarterly numbers, Wipro's counter witnessed selling pressure and slipped by 4.2 per cent on the Bombay Stock Exchange.

However, the scrip had outperformed the key index in the last two months on expectation of a good show in the October-December quarter.

Analysts feel that the management rejig may also hit the stock performance in the short-term.

"There was no surprise element in the numbers. Wipro has effected management change. We expect the stock to be range bound, post the recent run-up. We prefer Infosys and TCS in large caps," Kotak Securities senior vice-president (PCG Research) Dipen Shah said.

Echoing Shah's opinion, Geojit BNP Paribas Financial Services AVP Gaurang Shah said, "The management rejig has made the investors cautious, as it is now a big responsibility for Kurien, who will alone handle the position held by two people earlier."

Besides, Wipro's performance has been subdued in comparison to its peers Infosys and TCS, which may dampen investors' sentiments, Shah added.