IT services exporter Wipro Ltd posted quarterly profit which beat analyst estimates, but that was not enough for investors who sold off its stock on stronger earnings reports from rivals.
Wipro, which has restructured itself over the past two years to catch up with Tata Consultancy Services Ltd and others, had seen its shares rise nearly 50 per cent in 2013. That was in line with a rally for a sector fuelled by improving demand for outsourcing from clients in the United States and elsewhere.
That improvement saw Wipro on Tuesday set a revenue growth forecast for the quarter ending December to 1.8-3.6 per cent in dollar terms from the previous quarter, slightly above analysts' forecast of 1.5-3.5 per cent.
In the September quarter, Wipro reported net profit growth of 28.5 per cent, but that lagged the 34 per cent gain recently posted by market leader TCS and 64 per cent for HCL Technologies Ltd's .
Consolidated net profit was 19.32 billion rupees, exceeding analysts' estimate of 18.6 billion rupees, Wipro said on Tuesday after markets closed.
Shares in Wipro Ltd fell more than 6 per cent on Wednesday, halting a rally that recently saw the stock rise to its highest since 2000, before paring some of its losses.
Goldman Sachs, which has a sell rating on Wipro, cited as concerns weak growth in revenue from maintenance and business process outsourcing - the industry's bread and butter - and said it expects Wipro to continue to underperform rivals.
Barclays also pointed to growth lagging that of its peers.
Wipro is looking to regain momentum in part by seeking more business from its biggest existing clients.
Revenue from its top 10 clients rose 4.1 per cent from the previous quarter, faster than its overall IT services sales growth of 2.7 per cent. The latter was the best performance for seven quarters.
That strategy has "started to pay off, it is doing so, although a little belatedly," said Harit Shah, analyst at Nirmal Bang Institutional Equities in Mumbai.
Wipro has been looking to build its presence in the financial services industry,