Wipro shares fall on muted IT services sales forecast

Jul 24, 2012 |

Reuters

Bengaluru

Tags:

Wipro

Wipro Ltd(WIPR.NS), India's No. 3 software services exporter, forecast subdued IT services sales for the current quarter after posting an 18 per cent rise in quarterly profit that met market expectations on growth in outsourcing work.

The IT services unit, including back-office operations outsourcing, accounts for more than 75 per cent of sales at the company that also makes soaps, light bulbs and hydraulics equipment.

Wipro's IT Services Chief Executive T.K. Kurien is trying to boost market share amid economic uncertainty and currency volatility and attempting to close the narrow lead U.S.-based Cognizant Technology Solutions Corp (CTSH.O) has established.

Wipro, whose chairman is billionaire Azim Premji, said it expects September-quarter IT services revenue of $1.52 billion to $1.55 billion, a rise of 0.3 to 2.3 per cent from the June quarter.

Analysts were expecting Wipro to forecast a 2-4 per cent increase.

Consolidated net profit rose to 15.80 billion rupees for the fiscal first quarter ended June 30 from 13.35 billion rupees a year earlier for Wipro, which counts Citigroup Inc (C.N) and Cisco systems Inc (CSCO.O) among its clients.

Analysts, on average, had forecast a net profit of 15.95 billion rupees, according to Thomson Reuters I/B/E/S.

India's $100 billion export-driven outsourcing sector faces diminishing hopes of an early revival in demand as their biggest markets, the United States and Europe, grapple with changes in the economic and political climate.

Earlier this month, Infosys Ltd (INFY.NS), the no. 2 software exporter, made a bigger-than-expected cut in its revenue growth forecast for the current fiscal year. But sector leader Tata Consultancy Services Ltd (TCS.NS) beat expectations with a 38 percent rise in quarterly net profit.

Wipro shares, valued at about $16 billion, are down some 10 percent so far this year. In comparison, the broader Mumbai market has gained 9.2 percent, while the sector index is down 8.6 percent in 2012.

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