Wipro Net Income Climbs 21% as Software Demand Rises (Update2)
By Ketaki Gokhale and Jay Shankar
April 23 (Bloomberg) -- Wipro Ltd. reported fourth-quarter profit rose 21 percent as global demand for computer services sold by India’s third-largest software provider increased.
Net income climbed to 12.1 billion rupees ($271.6 million) in the three months ended March 31, from 10 billion rupees a year earlier, the Bangalore-based company said today. Profit compared with the 12 billion rupee average of 36 analyst estimates compiled by Bloomberg.
Wipro joins industry leader Tata Consultancy Services Ltd. in reporting earnings that signal demand for India’s software services is gathering steam as companies worldwide revive technology spending after the worst economic crisis since World War II. The new orders pipeline, almost frozen nine months ago, is now “increasing quarter after quarter,” Suresh Vaswani, joint-chief executive officer at Wipro’s information technology unit, said last month.
“Managements now look at outsourcing in a more favorable light, it’s a lesson taken away from the crisis,” Tarun Sisodia, an analyst at Anand Rathi Financial Services Ltd. in Mumbai, said before the results were announced. “Budgets that had been slashed before are coming back on line, so the total outsourcing done this year is going to be greater.”
Wipro rose 2.2 percent to 720 rupees as of 9:00 a.m. in Mumbai trading, the best performer today on the benchmark Sensitive Index, which gained 0.6 percent.
The company’s fourth-quarter sales climbed 8.2 percent to 69.8 billion rupees, missing the 71.1 billion rupee analysts’ estimate.
Revenue at Wipro’s IT-services business was $1.17 billion compared with its January forecast of as much as $1.18 billion. Wipro projects sales at the technology business will range from $1.19 billion to $1.22 billion this quarter.
‘Returning to Normal’
“The business environment is returning to normal,” billionaire Chairman Azim Premji said in a statement. “We saw good recovery in our challenged” industry segments of technology and telecommunications, he said.
Second-ranked Infosys Technologies Ltd. last week projected annual revenue may grow at the fastest pace in three years, and Oracle Corp. and Adobe Systems Inc. last month forecast a pickup in sales, fresh evidence that companies in the U.S. have resumed spending on technology.
‘Megadeals’
“Indian IT companies have entered an era of megadeals,” Sisodia said. “In 2009, we tracked a total $8 billion in deals awarded to Indian companies, spread across a hundred-odd deals. These are the kinds of deals you wouldn’t have seen earlier, you just wouldn’t have visualized Indian companies in that space.”
Wipro won several contracts in the last quarter including a seven-year outsourcing project for The Main Street America Group, a Jacksonville, Florida-based insurance company. The software provider also signed a multiyear application support services agreement with British American Tobacco Plc in January.
Wipro provides computer services such as designing and building software programs, product-engineering and back-office support to BP Plc, William Morrison Supermarkets Plc, Pitney Bowes Inc. and other customers. The company also makes soaps, light bulbs and hydraulic equipment.
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