Businessviewsreviews Wipro Q3 2011 Report

Wipro Q3 PAT rises 10%, y-o-y, IT’s CEOs resign

Company Snapshot
Industry: IT services Consulting, Application
Services: Outsourcing, BPO, Development and Maintenance,
Software Products BPO
Founded: 1945 BSE Code: 507685
Headquarters: Bangalore, NYSE: WIT
Karnataka, India Key people
Services: Product Engineering Azim Premji, (Chairman)
Solutions, Technology, TK Kurien , (joint CEO)
Infrastructure Services,

Jargon-free reports for easy understanding from www.businessviewsreviews.blogspot.com

 Businessviewsreviews Wipro Q3 2011 Report

The much-awaited financial results of Wipro’s Q3 FY’11 result

were announced early morning today which have more or less
met analysts’ forecasts.

Results of IT Services

The Bangalore-headquartered technology major while releasing its

financial results under International Financial Reporting Standards
(IFRS) has said that its IT Services Revenues, in dollar, terms were
$1,344 million, a sequential increase of 5.6% and YoY increase of
19.3%. When translated into Indian rupees, the IT Services
Revenues were up 15% Y-o-Y to Rs. 59.49 billion ($1,328 million).

Wipro’s IT Services Earnings Before Interest and Tax (EBIT) rose 8%

y-o-y to Rs 13.21 billion ($295 million*).

However, the company’s margins at 22.8% was flat during the

quarter over the immediate preceding September’10 quarter but
was significantly lower than 23.7% reported a year ago. “The
operating margins for IT Services business was flat, despite lower
working days and drop in utilization,” said Suresh Senapaty,
Executive Director & Chief Financial Officer, Wipro.

Also, price realization related to onsite projects was down by 3.6%

Y-o-Y. Further, Net Utilization (Excluding Trainees) was lower at
79.9% (Q3FY11) vs. 84.5% (Q3FY10), Y-o-Y.

Jargon-free reports for easy understanding from www.businessviewsreviews.blogspot.com

 Businessviewsreviews Wipro Q3 2011 Report

Higher attrition rate (Voluntary TTM at 21.6% vs. 9.9%, Y-o-Y) too is
a concern for the company. In terms of verticals, Technology and
Healthcare & Services saw de-growth of almost identical level of
3.5%

In terms of Geography, APAC and Other Emerging Markets grew the

highest at 37.8% Y-o-Y. India & Middle East business saw a growth
of 18.9% Y-o-Y.

In terms of Practices, Consulting business saw edged higher,

clocking a growth of nearly 60% Y-o-Y, as compared to others.

The company’s IT Services business added 36 new clients during

the third quarter ending December 31, 2010. There was also a net
addition of 3,591 employees during the same quarter. The company
also said that its Consumer Care and Lighting Revenues grew 21%
while the EBIT grew 14%, y-o-y.

Wipro is a $6bn enterprise (based on consolidated revenues of

FY'10) with major interests in Software Services Computer
Hardware, Consumer Products, and Lighting Solutions. Wipro’s IT
Services businesses accounted for 76% of its consolidated revenues
during the just concluded third quarter (i.e., Q3FY11). The
Bangalore-based firm is India’s third largest software exporter
behind TCS and Infosys.

See Growth Metrics below:

Jargon-free reports for easy understanding from www.businessviewsreviews.blogspot.com

Businessviewsreviews Wipro Q3 2011 Report

Jargon-free reports for easy understanding from www.businessviewsreviews.blogspot.com

Businessviewsreviews Wipro Q3 2011 Report

Jargon-free reports for easy understanding from www.businessviewsreviews.blogspot.com

Businessviewsreviews Wipro Q3 2011 Report

Jargon-free reports for easy understanding from www.businessviewsreviews.blogspot.com

Businessviewsreviews Wipro Q3 2011 Report

Jargon-free reports for easy understanding from www.businessviewsreviews.blogspot.com

 Businessviewsreviews Wipro Q3 2011 Report

Results of Wipro Ltd. (Consolidated)

The company also said that its Consolidated Revenues (which

include other businesses such as soaps and bulbs) were up 12% y-
o-y to Rs. 78.29 billion ($1.75 billion*) while Consolidated PAT grew
10% y-o-y to 13.19 billion ($294 million*).

The company’s results were almost in line with analysts’

expectations. A CNBC-TV18 poll of brokerages had estimated
consolidated net profit of Rs 13.18 billion and consolidated
revenues of Rs 80.02 billion. However, some analysts felt that
results were disappointing. “Wipro's third quarter results are below
our expectation. Revenue growth was lower-than-expected, whereas
PAT was in-line with our estimates. We expect the stock to see
correction as results lack any positive surprise,” said a report from
brokerage house.

Analysts have also expressed surprise at the change of guard at the

firm’s IT Services. “The management rejig has made the investors
cautious, as it is now a big responsibility for Kurien, who will alone
handle the position held by two people earlier,” NDTV Profit quoted
Geojit BNP Paribas Financial Services’ AVP Gaurang Shah as
saying.

Jargon-free reports for easy understanding from www.businessviewsreviews.blogspot.com

 Businessviewsreviews Wipro Q3 2011 Report

Highlights of the Results:

 IT Services Revenue in dollar terms was $1,344 million, a sequential

increase of 5.6% and YoY
 Increase of 19.3%. Non-GAAP constant currency revenue was $1325
million.
 IT Services Revenues were Rs. 59.49 billion ($1,328 million1),
representing an increase of 15% over the same period last year.
 Total Revenues were Rs. 78.29 billion ($1.75 billion1), representing an
increase of 12% over the same period last year.
 Net Income was Rs. 13.19 billion ($294 million1), representing an
increase of 10% over the same period last year.
 Non-GAAP Adjusted Net Income (excluding impact of accelerated
amortization of stock based compensation) was Rs. 13.09 billion ($292
million1), representing an increase of 9% over the same period last year.
 IT Services Earnings Before Interest and Tax (EBIT) was Rs. 13.21 billion
($295 million1), representing an increase of 8% over the same period last
year.
 IT Services added 36 new clients in the quarter.
 Net addition of 3,591 employees in the current quarter.
 Consumer Care and Lighting Revenue grew 21% over the same period
last year and EBIT grew 14%.
 Wipro declares an interim dividend of `2 ($0.041) per share /ADS.

(Source: Wipro)

(*For the convenience of the reader, the amounts in Indian rupees in this release have been
translated into United States dollars at the noon buying rate in New York City on December 30,
2010, for cable transfers in Indian rupees, as certified by the Federal Reserve Board of New
York, which was US $1=Rs.44.80. However, the realized exchange rate in our IT Services
business segment for the quarter ended December 31, 2010 was US$1=Rs.44.27)

Jargon-free reports for easy understanding from www.businessviewsreviews.blogspot.com

 Businessviewsreviews Wipro Q3 2011 Report

However, the company surprised market by saying that Suresh

Vaswani and Girish Paranjpe, the joint CEOs of IT Services, are
stepping down and in place TK Kurien will be the new CEO of
Wipro. Making the announcement Azim Premji, Wipro’s Chairman
said, “The Joint CEO structure was one of the key factors that
successfully helped us navigate the worst economic crisis of our
times. With the change in environment, there is a need for a simpler
organization structure. Kurien’s track record makes him uniquely
positioned to lead Wipro through the next phase of growth.”

Wipro’s Q3FY11 performance lags bigger rivals TCS and Infosys.

Earlier, TCS came out with better-than-expected Q3 numbers,
bettering market estimates, and Infosys’ numbers although good yet
disappointed the street.

In its Outlook for the Quarter ending March 31, 2011, the company
said, “We expect Revenues from our IT Services business to be in
the range of $1,384 million to $1,411 million, a sequential increase
of 3% to 5%( based on the constant currency exchange rates:
GBP/USD at 1.58, Euro/USD at 1.35, AUD/USD at 1.01, USD/INR
at 44.98).

The shares of Wipro fell 4% in the morning trade after the

announcement of the result.

Jargon-free reports for easy understanding from www.businessviewsreviews.blogspot.com