Wipro Q3 net profit up 5.4% QoQ at Rs 2198 crore; beats estimates

BENGALURU: Wipro, India's third largest software services exporter, reported tepid growth of 1.3 % in revenue, in a quarter where rivals Infosys and TCS have also shown up as underperformers, raising concerns about slowing growth across the industry.

The Bengaluru-based company on Friday offered a guidance of 1.1-3.1% for the fourth quarter, the lowest the company has projected for a three-month period this fiscal, and suggesting that its revenues will barely grow at about 7 % for the entire year.

"Developments in the global currency and commodity markets are affecting major economies unevenly even as India anticipates growth led by next-generation of economic reforms," said Chairman Azim Premji.


The management, however put up a brave face, saying growth will improve in the coming year. "We have seen fairly secular growth across sectors," said TK Kurien, chief executive, who will be completing four years in a fortnight from now. "This is the first time after many quarters, every business has performed. Clearly from deal pipeline perspective, we are bullish. We have a substantial deal pipeline which we will close in this quarter too".

Wipro's overall performance was hit by a decline in revenue from the energy and utilities vertical, which accounts for a fifth of the company's revenues, owing mainly to the decline in oil prices. Worse, the company is expecting some "headwinds" that could further stall growth in a few European accounts in the oil and gas sector.

Wipro's quarter-on-quarter revenue growth hasn't crossed the 3% mark since the second quarter of September 2012, when it reported a 4.6% expansion. "India IT services market is navigating through its mature stage and external forces such as consumerization, cloud, digital and startups are pressuring the large players' performance," said Bozhidar Hristov, analyst at US-based research firm TBRI.

"The IT services market is transitioning from body to mind-type levers. The vendors that are able to provide agility without losing focus on core businesses, will be the most successful in the next 3-5 years."

"Everyone has cut their IT spending forecasts in the past 12 months," said Jens Butler of London-based IT research firm Ovum. "I believe that it will be a tough quarter, as people become more wary … and wait to see (and hope) if the US can basically carry the rest of the world forward economically."

Although management at TCS and Infosys struck a positive note about demand for the current quarter and the year, technology research firm Gartner cut its global IT services growth forecast to 2.5% for calendar year 2015 from 4.1%. The firm also cut its worldwide IT spending outlook to $3.8 trillion in 2015 versus its previous expectation of 3.9%.