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Wipro: Demerger positive amid cloudy result
Nov 2, 2012

Wipro Limited has announced the second quarter results of financial year 2012-2013 (2QFY13). The company has reported a 1.5% QoQ growth in sales and a 1.9% QoQ growth in net profits respectively. Here is our analysis of the results.

Performance summary
  • Consolidated gross revenues grew by 1.5% QoQ during the quarter.
  • The IT Services revenues (78.7% of total revenue in rupee terms) witnessed a growth of 10.3% QoQ during the quarter, however, in US dollar terms, the IT Services revenue grew by 1.7%.
  • EBITDA margin improved by 1.1% QoQ to 19.9% during the quarter as compared to 18.8% seen during the previous quarter (ending June 2012). That was mainly due to an improvement in the gross margin.
  • Net profits grew by 1.9% QoQ. The growth would have been higher had there not been a drastic fall in exchange gains by almost 90% QoQ as well as a rise in effective tax rate by 3.6% QoQ.
  • Employee strength of the IT services business stood at 140,569 at the end of September 2012. The headcount in IT services business increased by 2,017 (on net basis) during 2QFY13.
  • Attrition declined to 14.6% as compared to 15.6% for the previous quarter (1QFY13).
  • IT services segment adds 53 new clients during the quarter, thereby taking the total count of active clients to 939 as compared to 919 seen at the end of 1QFY13.
  • Gross employee utilization rate was down by 66.8% during the quarter as compared to 68.3% seen in the previous quarter (1QFY13). Net employee utilization (excluding trainees) remained flat at 77.9% during the quarter as compared to 1QFY13.
  • Wipro Ltd. announced the demerger of its Consumer Care and Lighting (including furniture) business, Infrastructure Engineering and Medical Diagnostic Product and Services business into a separate company to be named as Wipro Enterprises Ltd.

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