UPDATE 3-Wipro Q1 beats f'cast; Tech Mahindra net falls

* Third straight quarterly fall in IT revenue

* Forecasts modest rise in Sept qtr IT services revenue

* Tech Mahindra's Q1 net falls on Satyam acquisition costs

* Wipro shares falls 1.5 pCt, Tech Mahindra ends down 5.1 (Updates with Tech Mahindra's result)

By Sumeet Chatterjee

BANGALORE, July 22 (Reuters) - Indian outsourcer Wipro Ltd (WIPR.BO) joined its bigger rivals in beating quarterly profit estimates but it was cautious about a strong pick-up in growth as the global downturn crimped technology spending.

Smaller player Tech Mahindra (TEML.BO) reported a near halving of its net profit, weighed down by interest costs for borrowings to fund its June quarter acquisition of Satyam (SATY.BO), which was hit by India's biggest corporate fraud.

Wipro, India's No. 3 software services exporter, saw signs of stability in its business and had a healthy pipeline of projects in the near term, but closing deals worth more than $100 million was taking longer, officials said.

"While these are positive first steps, I don't think we should get carried away that there is a major recovery which is rapidly underway," said Chairman Azim Premji.

"I think we need to be patient, I think we need to be cautious."

Wipro (WIT.N) expects its IT services revenue in the quarter to September to rise 0.2-2 percent from April-June to $1.04-$1.05 billion, after posting three consecutive quarters of decline.

"The flat guidance is an indication that the market is not yet conducive for growth, and companies are just being cautious," said Dipesh Mehta, sector analyst at Khandwala Securities.

Shares in Wipro, which has a market value of $13.9 billion, fell 1.5 percent to 451 rupees and Tech Mahindra lost 5.1 percent to 770.15 rupees in a Mumbai market that fell 1.5 percent.

"Although the worst appears to be over, till such time as the key markets of U.S. and Western Europe recover, there is still some pain left for the Indian IT industry," said Diptarup Chakraborti, principal research analyst at research firm Gartner said.

OUTSOURCING SLOWDOWN

Wipro said net profit in its fiscal first quarter to June rose 13 percent to 10.10 billion rupees ($210 million), under international accounting rules, from 8.95 billion a year ago.

A Reuters poll forecast net profit of 9.14 billion rupees for Wipro. Consolidated net profit, according to Indian accounting rules, stood at 10.16 billion rupees.

Tech Mahindra, which bought a 42.7 percent stake in the rebranded Mahindra Satyam, said net profit in April-June, its fiscal first quarter, was 1.4 billion rupees ($29 million) before exceptional items, down from 2.59 billion a year ago.

After providing for exceptional item, net profit fell to 1.32 billion rupees. BT Group (BT.L) holds a 31 percent stake in Tech Mahindra is also the largest customer.

Wipro, which offers IT solutions such as system integration, software application development and manages call centres, expects stable billing rates for the rest of the year and to hold or improve profit margins this year.

Bigger rivals Tata Consultancy Services (TCS.BO) and Infosys Technologies (INFY.BO) both posted profit growth above forecasts that helped dispel some gloom surrounding the $60 billion sector, but had warned the business environment was challenging.

After a scorching pace of growth for years, India's export-led outsourcing sector has been battling a slowdown over the past year as global customers struggled to stay afloat, went bust or tackled severe cost cuts, halting technology spending. ($1=48.1 rupees) (Additional reporting by by Prashant Mehra; Editing by John Mair)