Wipro

Wipro Chairman Azim Premji at a press conference in New Delhi, India.

On expected lines: Wipro, TCS, Infosys

All the top three major Indian IT firms -- Tata Consultancy Services (TCS), Infosys Technologies and Wipro -- either met or beat market and analyst expectations in the quarter ended September 30, 2009, registering their best performance in six quarters.

The heartening fact, say analysts, is the growth in volumes which implies that business is picking up. TCS, for instance, registered a 5 per cent growth in volumes while Infosys posted a 2.3 per cent growth. Wipro was the only company to show a dip in volume growth. But Edelweiss analysts opine that, since Wipro has not committed offers to the campus (unlike TCS and Infosys), it can absorb these volume declines without impacting margins in the coming quarters.

Wipro surprised positively

Viju George of Edelweiss says Wipro's numbers were "in line with expectations". However, he says the company "surprised us positively in registering a margin improvement in IT services of over 140 basis points (bps) sequentially to touch 23.8 per cent and providing a healthy guidance for IT-services revenues for Q3FY10 (2.5-4.5 per cent growth quarter on quarter)".

Wipro's guidance more robust than Infosys

And all companies are telling D-street that they see growth. Wipro's guidance was much more robust than that of Infosys, the guidance of which was in the range of Rs 5,429 crore and Rs 5,476 crore for the quarter ended December 31, 2009. Wipro guided for revenue in the range of $1,092 million to $1,113 million (around Rs 5,121.5 crore to Rs 5,219.9 crore), representing a growth of 4.5-5 per cent on top line. Wipro has said the next quarter will see volume growth in the range of 2.5-4 per cent.

Further offshoring (moving work to India, in this case) has been a key to improving margins and give cost benefits to clients this reporting quarter. In the case of TCS, for instance, offshoring improved by 74 bps this quarter, bringing the offshore component to 51 per cent of the overall revenue. In the case of Infosys, offshoring recorded a 3 per cent gain. This, coupled with increased utilisation rates, helped the margins grow.