* Q1 profit 15.80 bln rupees vs 15.95 bln expected by
* IT services sales seen at $1.52-$1.55 bln in Sept quarter
* Shares fall to 9-month low
By Harichandan Arakali
BANGALORE, July 24 Wipro Ltd, India's
No. 3 software services exporter, joined sector bellwether
Infosys in giving a muted forecast for its main IT
services business as global spending on outsourcing services
slows, pushing Wipro's shares down to a nine-month low.
The disappointing outlook from Wipro, controlled by
billionaire Azim Premji, also renewed concerns about the
Bangalore-based company's ability to preserve market share
despite undertaking a major management reshuffle last year.
Wipro said on Tuesday it expects September-quarter IT
services revenue of $1.52 billion to $1.55 billion, a rise of
0.3 to 2.3 percent from the June quarter. Analysts were
expecting Wipro to forecast a 2-4 percent increase.
The IT services unit, including back-office operations
outsourcing, accounts for more than 75 percent of sales at the
company that also makes soaps, light bulbs and hydraulics
"The numbers look very bad...It looks like they are yet to
be able to turn around their business despite all the
restructuring," said Hardik Shah, an analyst at KR Choksey
Shares and Securities.
The company last year named veteran T.K. Kurien as the chief
executive of the IT services business in place of its joint CEOs
to reverse its underperformance compared with larger rivals such
as Tata Consultancy Services Ltd.
Kurien is also attempting to close the narrow lead
U.S.-based Cognizant Technology Solutions Corp has
India's $100 billion export-driven outsourcing sector is
facing diminishing hopes of an early revival in demand as its
biggest markets, the United States and Europe, grapple with
changes in the economic and political climate.
Earlier this month, Infosys Ltd, the no. 2 software
exporter, made a bigger-than-expected cut in its revenue growth
forecast for the current fiscal year.
"It's pretty obvious that the volume growth is an issue for
the sector," said Apurva Shah, head of investment research at
BNP Paribas Mutual Fund, which manages about $750 million in
investments, including large-cap Indian software companies.
"I don't think there will be any serious improvement in the
next few quarters."
Consolidated net profit rose to 15.80 billion rupees
($282.55 million) for the fiscal first quarter ended June 30
from 13.35 billion rupees a year earlier for Wipro, which counts
Citigroup Inc and Cisco systems Inc among its
Analysts, on average, had forecast a net profit of 15.95
billion rupees, according to Thomson Reuters I/B/E/S.
Wipro, which is also listed in New York, said total
revenue rose 24 percent to 106.53 billion rupees as the company
added 37 clients in the quarter, including the Royal Philips
The company's IT services unit posted sales of $1.52
Wipro shares fell as much as 4.4 percent on Tuesday before
erasing some of the losses to be down 3.3 percent at 344.70
rupees on the National Stock Exchange.
The shares, valued at about $16 billion, are down about 13
percent so far this year. In comparison, the broader Mumbai
market has gained 9.2 percent, while the sector index
is down 8.8 percent in 2012.