BANGALORE -- Wipro Ltd. Tuesday reported a lower-than-expected rise in its quarterly net profit and echoed its rival Infosys Ltd. by forecasting weaker growth at its outsourcing division, suggesting a slowdown in technology investments worldwide.
India's third-largest software exporter by sales said it expects revenue at its outsourcing division to be flat or at best grow 2% sequentially in the July-September period, as the weak economic climate continues to outweigh the company's efforts to turn around the unit.
The weak outlook pushed down Wipro's shares as much as 4.3% to 341 rupees--its lowest level in nine months--before paring losses to trade down 3.3% at 344.75 rupees, while the benchmark Sensex was up 0.3% at 0440 GMT.
Wipro's performance comes amid a "volatile environment" in the global economy, T.K. Kurien, executive director and chief executive of the outsourcing division said in a statement.The Bangalore-based company's outlook is in line with second-ranked Infosys, which earlier this month halved its annual revenue guidance citing a contraction in technology investments by clients. However, market leader Tata Consultancy Services Ltd. is confident of outpacing the outsourcing industry's sales growth estimate of 11%-14% for the year.
The New York- and Mumbai-listed company said its net profit rose more than 18% to 15.80 billion rupees ($282 million) in the April-June period, compared with 13.35 billion rupees a year earlier. Profit grew 6.7% sequentially.
Sales rose more than 24% to 106.20 billion rupees, up 8% from the previous three months.
The average of forecasts from 23 analysts in a poll was for a net profit of 15.99 billion rupees on revenue of 105.47 billion rupees.
Wipro expects revenue of $1.52 billion-$1.55 billion from its outsourcing division in the quarter that began on July 1, compared with a sequential decline of 1.4% to $1.52 billion in April-June.
Operating margin at the outsourcing division expanded to 21% from 20.7% in the previous three months, aided by a near-8% average fall in the value of the Indian rupee against the dollar.
Wipro restructured the operations of Wipro Technologies--the outsourcing division that accounts for three-fourths of its revenue--at the beginning of last year hoping to accelerate its growth by the end of the year. However, the euro zone's debt woes at the end of last year derailed Wipro's efforts.
The company also has a consumer-care and lighting-product business.
Edited By Cen Fox Post Team
