Indian outsourcing giant Wipro ( WIT) posted a 63% increase in net profit during its fiscal fourth quarter, as sales remained strong in the face of an American backlash. The Bangalore-based company also hit the $1 billion mark in annual sales for the first time, the second major Indian outsourcer to do so. Rival Infosys ( INFY) made a
similar announcement last week. Wipro shares were recently up $1.54, or 3.4%, to $46.79. Friday morning, Wipro said its net profit in the March quarter rose to $71.3 million or 31 cents a share, compared with $43 million, or 19 cents a share, a year ago. Analysts polled by Thomson First Call were expecting a profit of 27 cents. (Rupee-to-dollar conversion rates were based on the average exchange rate during the quarter.) Global IT services, the company's core business, grew to 28% to $276 million, while total revenue increased by 50.4% to $388 million during the quarter. The growth in revenue was above the high end of Wall Street's expectations, which ranged from $334.8 million to $375 million. Although important from an overall financial perspective, total revenue includes old lines of business, such as cooking oil, and doesn't reflect Wipro's position in the global economy. "Wipro is managing costs well, and is doing a good job cross-leveraging different services," said Sameer Nadkarni, who covers Wipro for WR Hambrecht. Typically, the company will get in the door by taking over routine, but laborious, software jobs such as database maintenance, and then move clients to higher-margin services such as development or network management, he said. (WR Hambrecht has not done investment banking for Wipro.) Wipro Chief Finance Officer Suresh Senapaty said in a prepared statement that higher prices and a successful hedging strategy have kept damage from the rising rupee to a minimum. The rupee has risen 4.4% against the dollar year to date, and 7.8% in the last 12 months.
Wipro does not give overall guidance, but did say that it expects global IT services to increase by 5.8% to $292 million during the current, or June, quarter.