Click to play videoNew Delhi: Wipro declared its Q1 FY08 results on Thursday. Blame the rising rupee and increasing wage pressure, IT bellwether has posted a net profit of Rs 726 crore, down 15.2 per cent against Rs 856 crore in the previous quarter.
"The results for the quarter are satisfying considering the strong headwinds faced by us in the form of an appreciating rupee," Wipro Chairman Azim Premji said.
The management of Wipro said that the growth came mainly from financial and telecom services and its BPO arm. According to CFO, Suresh Senapaty, the rupee rise impacted margins by 3.4 per cent, but they were able to restrict it to 2.4 per cent. They expect most of the growth in the next quarter to be volume-driven.
They see global IT revenue growth at 7 per cent (QoQ) to come from BFSI (Banking, financial services and insurance segment), telecom, tech and media services and BPO. The margins are sustainable at current levels for now.
The company also expects additional earnings of USD 130 million from European dealings over the next five years. The overseas contracts are expected to contribute from Q2 onwards, said Sudip Banerjee, President-Enterprise Solutions.
The company has a forex cover of USD 400 million as on June 30, 2007. They expect recovery in margins in Q2 via hedges. The management believes increasing fixed price contracts will help get them a better realisation.
Utilisation, which improved by 4 per cent, helped restrict the damage to OPM to 2.5 per cent.
Wipro's clients are very receptive to currency appreciation. AL Rao, COO, expects the Unza acquisition to increase their share in Asian markets. The deal with Unza will include Asia Pacific and Singapore.
The company sees huge growth in its BPO earnings given the declined attrition levels and increased ultilisations. Wipro management expects wage hikes for offshore employees to impact margins by 140-150 basis points.
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