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Wipro Q4 profit up 28.8%; projects Apr-Jun revenue at $1.75 bn

Wipro Thursday posted a 28.8 percent increase in profit to Rs 2,226.5 crore in the quarter ended March 31 on the back of improving global economic sentiment and cost optimisation.

Bangalore: The country's third-largest software services exporter Wipro Thursday reported a 28.8 percent jump in net profit for the fourth quarter, helped by a revival in Europe, robust growth in the US and a cost optimisation drive.

Profit climbed to Rs 2,226.5 crore in the three months ended March 31 from Rs 1,728.7 crore a year earlier, the Bangalore-based company said in a statement.

Net sales grew 21.7 percent to Rs 11,703.6 crore from Rs 9,613.1 crore a year earlier. The results are under International Financial Reporting Standards (IFRS).

Wipro, which expects a strong deal pipeline in the first quarter of this financial year, projected IT services revenue of USD 1.715-1.755 billion in the three months ending June 30.

"The steady improvement in global economy, coupled with the exciting pace of technological advancements, presents us with opportunities to create innovative solutions to help our customers differentiate, compete and succeed in their respective market," Wipro Chairman Azim Premji said.

Revenue from IT services stood at Rs 10,620 crore, up 24 percent year-on-year.

In US dollar terms, IT services revenue was USD 1.72 billion, up 8.5 percent year-on-year and in line with its projection of USD 1.712-1.745 billion for January-March.

"Fourth quarter has gone off well as planned. We have achieved a sequential revenue growth of 2.5 percent for the quarter in line with our guidance.

"Our investments in automation, platform-based delivery and process simplification have helped us expand our margins by 430 basis points y-o-y to 24.5 percent -- our highest margin in last 15 quarters," Wipro Chief Executive Officer T K Kurien told the media here.

For 2013-14, Wipro's profit rose 17.5 percent to Rs 7,796.7 crore and revenue grew 16.1 percent to Rs 43,754.9 crore.

IT services revenue for the year was at USD 6.62 billion (up 6.4 percent y-o-y) or Rs 39,950 crore (up 18 percent).

Wipro added 59 customers in the quarter. It had 1,46,053 employees as of March 31 in its IT services business.

"We saw strong deal closure in the current quarter with our order book being one of the highest we have ever seen and we see the momentum continue in the first quarter this fiscal also and we have a strong funnel in terms of deals coming up for closure," Kurien said.

There is a seasonality with the firm's quarterly performance, which is playing out in the first quarter also, he added.

"As we enter the year, we see broad demand trends remaining stable both in terms of volume and realisations," he said.

IT products delivered revenue of Rs 1,110 crore (USD 185 million) in the quarter, up 3 percent, while for the year, it dipped 1 percent to Rs 3,880 crore (USD 646 million).

Wipro declared a final dividend of Rs 5 (USD 0.08) per share/ADS, taking the total for the year to Rs 8 (USD 0.13).

Shares of the company, which announced results after market hours, rose 2.39 percent to Rs 585.55 on the BSE.

On employees, Kurien said: "We continue to drive and focus on employee satisfaction. Our salary hike cycle and promotion, as always, will be effective from June 1, 2014."

Asked about the quantum of the wage hike, Wipro Senior Vice President (Human Resources) Saurabh Govil said, "It is in line with the industry. Typically, the plan right now is...6-8 percent for offshore and 2-3 percent for onsite employees."

Both onsite and offshore hiring continues as per plan, Govil said, without providing details.

On region-wise growth, Kurien said: "Proactive investment in continental Europe is showing early signs of success in terms of deal wins. The US has grown ahead of company average.

"We see our customer's business environment change significantly in two key areas. There is demand for leveraging new digital technologies, both for optimising on technology spends and also to differentiate in the market place," he said.

TCS, the country's largest software services firm, had also said demand would be stronger in 2014-15 as the global economy improves and clients increase technology spends, especially on new platforms such as cloud, mobility, social and analytics.

Wipro expects strong demand in healthcare, retail banking, utilities, process manufacturing, auto and pharma, Kurien added.

"We see spending far more constrained in retail, insurance and hi-tech. From service line perspective, we see good traction in global infrastructure services and revival of demand in application space," Kurien said.

IT-BPO industry body Nasscom has projected the sector's export revenue to grow 13-15 percent in this financial year.

On acquisitions, Kurien said: "Acquisition for us is very simple. It is to fill the gap in terms of geography or in terms of competency. We will not do acquisition to make sure that our growth looks good. We are going to be selective in our acquisition."

Wipro has launched an independent unit, Wipro Digital, focusing on the chief marketing officer, he said, adding that the firm saw its net promoter score increase significantly, based on an independent, third-party survey.

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