Wipro Ltd, India’s third-largest IT services exporter, beat quarterly profit expectations as revenue in its core business grew at the fastest rate quarter-on-quarter in almost two years, thanks to higher spending by its biggest clients.
Wipro followed its rivals in India’s showpiece IT services industry with robust results and forecast December-quarter revenue in its main business would grow in a range of 1.8-3.6 per cent in dollar terms from the previous quarter, slightly ahead of analyst forecasts for 1.5-3.5 per cent growth.
“Wipro basically confirms the demand recovery that the industry is witnessing,” Kuldeep Koul, an analyst at ICICI Securities, said in a note.
India’s IT services sector is enjoying a brightening demand outlook from clients in the US, its biggest market, as well as in Europe, where companies looking to cut costs are increasingly turning to outsourcing.
“Client confidence is on the uptick and we see it reflected in our results,” Wipro’s billionaire chairman Azim Premji said in a statement.
Bangalore-based Wipro said consolidated net profit rose an annual 28.5 per cent in the three months ended September 30 to Rs 19.32 billion, from Rs 15.04 billion a year earlier. That compares with the Rs 18.6 billion mean estimate of 29 analysts surveyed by Thomson Reuters.
Revenue from its 10 biggest customers rose by 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.
Wipro is looking to regain momentum after its growth lagged that of Indian rivals Tata Consultancy Services and HCL Technologies Ltd as well as US-based Cognizant Technology Solutions Corp, in part by seeking more business from its biggest existing clients.
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.
“There are certain signs that the turnaround is happening, it’s not happened yet, but it’s getting there.”
Wipro has been looking to build its presence in the financial services industry, which is the biggest consumer of IT services but where it lags rivals TCS and Infosys Ltd. Wipro said it won