Wipro Limited (WIT) More Cautious on 2013 Than Tata Consultancy Services Limited (TCS) and Infosys Ltd (INFY)

Page 1 of 2

Bangalore based company Wipro Limited (NYSE:WIT) , one of the leading firms in India’s powerful IT sector has posted mixed results for its previous quarter. Although quarterly earnings beat analysts’ estimates, the outlook is weak as sales from its outsourcing services division for the current quarter ending March 2013 will most likely remain flat, or in the best case scenario, increase by 3% from the previous quarter.  Following the announcement, the company’s shares on the Bombay Stock Exchange slid by 6% in early hours of trading.

Wipro’s quarterly net income increased by 17.9% to $317 million (Rs 17.16 billion), about $15 million more than analysts’ estimates, while sales increased by 10% from last year’s $2.05 billion (Rs 109.89 billion).  Out of the total revenues, $1.58 billion have come from its outsourcing services unit, which forms the backbone of the company. For its final fiscal quarter of FY 2013 ending in March, Wipro expects these revenues to increase to the range of $1.585-$1.625 billion. Operating margins at this unit have increased slightly from 20.7% in Q2 ending September 2012 to 20.8% in Q3 ending December 2012.

Wipro’s main competitors; the market leader Tata Consultancy Services Limited (NSE:TCS), which has significant representation in Technology GEMS ETF (NYSEMKT:QGEM), and the second biggest Indian IT firm Infosys Ltd (NYSE:INFY) have also posted strong results for their respective quarters, beating analysts’ estimates; but unlike Wipro, the other two are more optimistic about the future. Overall growth in the outsourcing services market remains modest at best. TCS has the competitive advantage due to its flexible pricing policies while Infosys’s earnings got a boost from its acquisition of the Zürich based management consultancy firm Lodestone for $349 million in September 2012. I have discussed Infosys and its current growth strategy in more detail in this previous article.

Infosys Ltd ADR (NYSE:INFY)However, TCS and Infosys have not convinced Azim Premji, Wipro’s Chairman who believes that “the overall mood on economic growth continues to be muted.” Then again, Wipro relies heavily on the telecom, technology and manufacturing sectors and has already witnessed an extremely challenging period of growth following the global financial crisis. In the two years since the beginning of 2010 till the end of 2011, Wipro’s stock at India’s National Stock Exchange (NSE) fell by 1.4%. In the same period, TCS’s shares rose by 58.5%.

Wipro’s outsourcing division is not struggling anymore and is posting increasing sales. This is a big positive that has come after Wipro restructured its core operations in 2011. Growth for India’s outsourcing companies in the last couple of years has remained challenging due to an economic slowdown in the U.S and Europe. The two markets contribute about 75% of total sales to India’s $100 billion IT outsourcing sector.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!