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Wipro: Weak performance continues - Views on News from Equitymaster
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Wipro: Weak performance continues
Jul 24, 2012

Wipro Limited (Wipro) has announced the first quarter results of financial year 2012-2013 (1QFY13). The company has reported a 6.8% QoQ growth in sales and a 6.7% QoQ growth in net profits respectively. Here is our analysis of the results.

Performance summary
  • Consolidated gross revenues grew by 6.8% QoQ during the quarter. This was aided by the steep rupee depreciation in recent times.
  • In terms of US dollar, the IT services revenues (78% of total Revenue) witnessed a decline of 1.4% QoQ during the quarter. However, the growth in IT services revenues was 0.3% QoQ on constant currency basis.
  • Operating margins declined by 0.6% QoQ to 18.8% during the quarter as compared to 19.4% seen during the previous quarter (ending March 2012). This was mainly due to higher selling & marketing expenses (as percentage of sales).
  • Despite lower margin at operating levels, net profits grew by 6.7% QoQ. This was on account of higher exchange gains as well as slightly lower effective tax rate, which offset the negative effects of higher finance expenses during the quarter.
  • Employee strength of the IT services business stood at 138,552 at the end of June 2012. The headcount in IT services business increased by 2,632 (on net basis) during 1QFY13. Attrition declined to 15.6% as compared to 17.5% for the previous quarter (4QFY12).
  • IT services segment adds 37 new clients during the quarter, thereby taking the total count of active clients to 919 as compared to 943 seen at the end of 4QFY12.
  • Gross employee utilization rate was up to 68.3% during the quarter as compared to 67.4% seen in the previous quarter (4QFY12). Net employee utilization (excluding trainees) was also up to 77.9% during the quarter as compared to 76.1% seen during 4QFY12.

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