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Wipro profits up 18 percent, growth outlook muted

MUMBAI, India — Wipro’s June quarter profit rose 18 percent from a year earlier but it warned growth will stall as economic uncertainty in Europe and the US, both crucial export markets, hits India’s multibillion dollar outsourcing industry.

Net income for the April to June quarter was 15.8 billion rupees ($284 million), the company said Tuesday. Revenues rose 24 percent from a year earlier to 106.53 billion rupees ($1.92 billion). Both were in line with expectations.

Analysts polled by FactSet had expected net income of $288.4 million on sales of $1.91 billion.

Wipro, India’s third-largest outsourcer, said revenue in its mainstay information technology services business will be flat this quarter, at between $1.52 and $1.55 billion from $1.52 billion for the prior quarter.

Growth in Wipro’s core business has already faltered. After two quarters of sequential growth around 2 percent, Wipro’s IT services revenues for the June quarter fell 1.4 percent from the prior quarter in dollar terms, hit by a $25 million foreign exchange loss.

That disappointed investors, who drove the stock down nearly 3 percent in Mumbai Tuesday, after a near two percent slide on Monday.

Ankita Somani, an analyst at Mumbai’s Angel Broking, said the dollar IT revenues came in below expectations because of the currency loss, while the earnings guidance was “decent.”

“This year won’t be as good as the last couple of years for IT companies,” she said, citing falling spending by banking and financial services clients.

The U.S. accounts for over half of Wipro’s revenue and Europe accounts for nearly a third.

Rival Infosys, which has positioned itself as a premium player, has also felt the pinch of economic uncertainty in its most important export markets. Its U.S.-listed shares fell to their lowest in three years after it cut its sales forecast and missed profit expectations for the June quarter.

India’s top outsourcer, Tata Consultancy Services, which has pushed geographic diversification more aggressively than its peers, fared better, posting 13.6 percent profit growth for the June quarter on strong volumes, topping Infosys’ 8.3 percent growth.