Demand environment better but unsure about IT budgets: Wipro
Bangalore: Country's third largest software services provider Wipro on Friday said notwithstanding the improvement in demand scenario, there is still uncertainty over IT budgets for the next fiscal.
"There has been a big change in just the environment itself, it has become a little more positive. That's the good news.
"The bad news is that from our perspective we see two challenges - one is that we see the fiscal cliff talks still continuing and we don't know when finally the budgets would come in and what it would mean in terms of buying in this quarter," Wipro IT Business Executive Director and CEO T K Kurien said.
Wipro registered a 18 percent jump in net profit and 10 percent increase in revenues in the October-December 2012 quarter.
The IT services revenue, which accounted for 78 percent of its revenues, stood at USD 1.577 billion (Rs 8,602 crore) in the reported quarter, meeting its guidance of USD 1.560 billion to USD 1.590 billion for the quarter.
Wipro expects its revenues from IT services business to be in the range of USD 1.585 billion to USD 1.625 billion for the quarter ended March 31, 2013.
"Traditionally Q4 has been a strong quarter for us. The other little bit of concern that we have factored in (in the guidance) is that there are a lot of projects that we won last quarter... When execution will start, when ramp ups will begin? I think that is what we have factored in the guidance," Kurien said.
He added that the company has "picked in a little bit on caution" on its guidance so that it does not "fall short in case the environment turns negative".
While Wipro joined larger rivals TCS and Infosys in posting strong profit numbers, its shares tanked eight percent to finally close 7.88 percent lower on account of the "soft" guidance.
"Wipro reported results soft on revenue but stronger on margin than expectation. Guidance looks softer than what consensus might be expecting," a Prabhudas Lilladher report said.
Dipen Shah, Head (Private Client Group) Research at Kotak Securities said the company's volume performance is much lower than that reported by peers. "We expect the stock to attract better valuations once volume growth starts improving," he added.
Economic uncertainty has led clients in the US and Europe to invest cautiously on IT. These markets together account for more than 75 percent of India's IT sector business.