* Q2 net profit at 16.11 bln rupees vs 15.37 bln estimates
* Sees Q3 IT services sales growing 1.3-3.2 percent from Q2
* Shares rise as much as 3.2 pct, extend Thursday's gain
(Adds CEO and analyst comments, share movement)
By Harichandan Arakali
BANGALORE, Nov 2 Wipro Ltd, India's
No. 3 software services provider, topped quarterly profit
estimates and forecast modest growth, sending its shares up more
than 3 percent and easing fears that global economic woes will
curb outsourcing spending.
India's $100 billion IT services sector has seen a sharp
slowdown in growth in recent quarters as western clients hold
back on spending amid Europe's economic struggles and sluggish
corporate earnings growth in the United States.
Wipro, which has invested in sales and marketing to boost
orders, posted better-than-expected margins and its revenue
forecast for the current quarter met market estimates, a relief
to investors worried that its growth has lagged rivals in recent
"Growth is slightly subdued in comparison with peers, but
they are taking all the steps in the right directions," said
ICICI Securities analyst Kuldeep Koul, who has an "add" rating
on the stock.
Profit for the three months ended September rose 24 percent
to 16.11 billion rupees ($286 million) from 13.01 billion rupees
in the year-ago period, well above analysts' estimates of 15.37
billion rupees, according to Thomson Reuters I/B/E/S.
The company forecast IT services revenue for the three
months ending December would rise 1.3-3.2 percent from the
September quarter to $1.56-$1.59 billion, in line with analysts'
expectations of 1 to 4 percent growth.
Operating margins at its IT services business fell by a
smaller-than-expected 30 basis points to 20.7 percent from the
"Margins coming down by not even 100 basis points is
definitely a positive," said Ankita Somani, an analyst with
Angel Broking in Mumbai. She had expected operating margins of
19.3 percent due to wage hikes in June.
For a graphic on Wipro results, click: link.reuters.com/bek73t
Shares in Wipro, which has a market value of $16.5 billion,
rose as much as 3.2 percent after the earnings announcement,
before paring gains to trade up 1.0 percent. The benchmark
Mumbai market index was up 0.8 percent.
The result follows a move early last year by the company's
billionaire chairman Azim Premji to replace the two co-CEOs of
its IT business with another company veteran, T.K. Kurien.
POSITIVE ON SECOND HALF
"We expect the second half to be better in terms of growth
rate, we are already seeing some momentum," Chief Financial
Officer Suresh Senapaty said.
Total revenue for July-September rose 17 percent on a year
earlier to 106.57 billion rupees, while Wipro added 53 clients
for its IT services during its fiscal second quarter.
"I think the pipeline has remained more or less the same. It
has gone up a bit, but what we're hoping for is that after the
(U.S.) elections, closures (of deals or orders) will start,"
Kurien told reporters.
India's IT sector index has lagged the broader
market this year but has rallied more than 12 percent since a
July low as investors became more optimistic for stability in
the global economic environment.
India's outsourcing sector generates more than 90 percent of
its sales from providing services, including setting up IT
networks and developing software applications, for overseas
clients and counts the United States and Europe as its biggest
Wipro said on Thursday it will fold all its non-IT services
including consumer care and medical diagnostics into a new firm
to focus on outsourcing, which accounted for 86 percent of its
revenue in the fiscal year that ended in March.
The move was seen as an effort to boost growth amid
cutthroat competition from local rivals Infosys Ltd
and Tata Consultancy Services as well as global majors
such as IBM and Accenture.
Last month, India's top IT services company Tata Consultancy
and fourth-ranked HCL Technologies beat expectations
for their second-quarter earnings, while No. 2 player Infosys
posted profit that was in line with forecasts.
($1 = 53.7600 Indian rupees)
(Reporting By Harichandan Arakali; Additional reporting by
Sumeet Chatterjee; Writing by Aradhana Aravindan; Editing by