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Wipro: Muted performance ends FY12 - Views on News from Equitymaster
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Wipro: Muted performance ends FY12
Apr 25, 2012

Wipro Limited has announced the fourth quarter results of financial year 2011-2012 (4QFY12). The company has reported a 0.7% QoQ decline in sales and a 1.7% QoQ growth in net profits respectively. Here is our analysis of the results.

Performance summary
  • Sales declined by 0.7% QoQ during the quarter. This came on the back of 0.8% QoQ growth in volumes during the quarter. For the year ended March 2012 (FY12), sales grew by 19.8% year-on-year (YoY).
  • The growth in revenues was 1.3% QoQ on constant currency basis. In terms of US dollar revenues, the growth in sales was 2.0% QoQ during the quarter.
  • Operating margins expanded by 0.5% QoQ to 19.4% during the quarter as compared to 18.9% seen during the previous quarter (ending December 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 FY12, margins at operating levels were down by 2.0% YoY to 19.1% as compared to 21.1% in the same period last year.
  • Net profits grew by 1.7% QoQ. This was on account of higher operating margins, higher exchange gains as well as lower interest expense, which offset the negative effects of higher effective tax rate during the quarter. For FY12, net income increased by 5.2% YoY.
  • Employee strength of the IT services business stood at 135,920 at the end of March 2012. The headcount in IT services business reduced by 814 (on net basis) during 4QFY12. Attrition declined to 17.5% as compared to 19.0% for the previous quarter (3QFY12).
  • IT services segment adds 41 new clients during the quarter, thereby taking the total count of active clients to 943 as compared to 953 seen at the end of 3QFY12.
  • Gross employee utilization rate was marginally up to 67.4% during the quarter as compared to 67.1% seen in the previous quarter (3QFY12). However, net employee utilization (excluding trainees) was down to 76.1% during the quarter as compared to 77.5% seen during 3QFY12.
  • Proposed a final dividend of Rs 4 per share. Including this, total dividend for FY12 is Rs 6 per share (yield of 1.5%).

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