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Wipro: Growth momentum continues

Jan 20, 2012

Wipro Limited Wipro has announced the third quarter results of financial year 2011-2012 (3QFY12). The company has reported a 9.7% QoQ growth in sales and a 12.0% QoQ growth in net profits. Here is our analysis of the results.

Performance summary
  • Sales grew by 9.7% QoQ during the quarter. This was driven by the steep depreciation in the rupee as well as a volume growth of nearly 1.8% QoQ during the quarter. For the nine months ended December 2011 (9MFY12), sales grew by 20.2% year-on-year (YoY).
  • Operating margins expanded by 0.6% QoQ to 18.9% during the quarter as compared to 18.3% seen during the previous quarter (ending September 2011). This was due to lower cost of revenues which offset the negative effects of higher selling & marketing as well as the higher general and administration expenses (all as percentage of sales). However for 9MFY12, margins at operating levels were down by 2.5% YoY to 18.9% as compared to 21.4% in the same period last year.
  • Net profits grew by 12.0% QoQ. This was on account of higher operating margins, higher exchange gains as well as lower depreciation charges, which offset the negative effects of higher effective tax rate during the quarter. For 9MFY12, net income increased by 4.3% YoY.
  • Employee strength of the IT services business stood at 136,734 at the end of December 2011. IT services added 5,004 (net) employees during 3QFY12. Attrition declined to 19.0% as compared to 21.1% for the previous quarter (2QFY12).
  • IT services segment adds 39 new clients during the quarter, thereby taking the total count of active clients to 953.
  • Gross utilization rate was up to 67.1% during the quarter as compared to 69.3% seen in the previous quarter (2QFY12).
  • Proposed an interim dividend of Rs 2 per share (yield of 0.5%).

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