UPDATE 3-India’s Wipro results lag rivals; tech demand improves

* Sees Q1 IT services revenue up as much as 4 pct from Q4

* Q4 net 12.09 bln rupees vs market expectations of 12 bln

* Says business environment returning to normalcy

* Posts strongest pace of quarterly staff addition in 2 yrs

* Recommends 2:3 bonus; shares edge down after early gains
(Adds more details, background, quote)

By Sumeet Chatterjee

BANGALORE, April 23 (BestGrowthStock) – India’s Wipro Ltd (WIPR.BO: )
joined its two bigger rivals in flagging accelerated growth for
the country’s showpiece software services sector as it met
expectations with quarterly profit rising by over a fifth.

Sector leader Tata Consultancy Services (TCS.BO: ) beat
estimates, and No. 2 Infosys Technologies (INFY.BO: ) met profit
forecasts this month and both gave a positive outlook on rising
demand. [ID:nSGE63J02J] [ID:nSGE63B06V]

India’s $60 billion outsourcing sector is betting on
overseas clients loosening their purse strings this year in a
global technology sector recovery that has helped IBM (IBM.N: ),
Microsoft (MSFT.O: ) and Intel (INTC.O: ) report strong results.

Investors were quick to punish firms such as Wipro which
were not handsomely beating already-high market expectations.

“The guidance is modest. If they just match that guidance,
then they will be lagging peers,” said Apurva Shah, head of
research at brokerage Prabhudas Lilladher. “I expect Infosys
and TCS to do better than that,” he said.

Wipro, majority-owned by billionaire Chairman Azim Premji
who mostly travels economy class, unexpectedly recommended two
bonus shares for every three, which pushed up its shares
briefly.

Premji quit Stanford University in the mid-1960s, with his
degree in engineering unfinished, to help run his family’s
ailing vegetable oil business after his father died.

Wipro diversified into information technology in 1980 and
counts Citigroup (C.N: ), Cisco (CSCO.O: ), and Credit Suisse
(CSGN.VX: ) among its leading clients.

“”Overall, macro environment is recovering. We are seeing
very positive signs…large deals are very much on the table,”
Premji told a news conference.

Wipro shares, valued at $23 billion, pared early gains to
trade 0.8 percent lower by 0830 GMT in a broader Mumbai market
(.BSESN: ) up 0.4 percent. Wipro added 5,325 staff in
January-March, its strongest pace of staff addition in over two
years.

“The guidance is slightly better than Infosys, but I would
say that there is nothing extra-ordinary in it,” said Rohit
hAnand, analyst with PINC Research, referring to Wipro’s
results.

So far this year, Wipro shares have risen 2.7 percent,
while Infosys and Tata Consultancy shares are up about 5
percent each.

Growing competition from global firms such as IBM,
Accenture (ACN.N: ) and Hewlett-Packard (HPQ.N: ) is a key risk for
the sector, which manages complex computer networks to
maintaining technology operations for Fortune 500 customers.
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For a related graphic, click:
http://graphics.thomsonreuters.com/10/IN_WPR0410.gif

For Wipro’s growth estimates according to StarMine, click:

http://link.reuters.com/net98j
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DEAL FLOW IMPROVES BUT RUPEE HEADWIND

Wipro, which develops software applications, integrates IT
systems and manages call centres, said January-March net profit
rose to 12.09 billion rupees ($272 million) under international
accounting standards from 10.01 billion a year ago.

A Reuters poll of brokers had forecast a net profit of 12
billion rupees for Wipro. Revenue rose 8 percent to 69.83
billion rupees, as the company added 27 new clients in IT
services.

Indian software firms are winning new orders and seeing
stability in fees for services after a brutal slide in demand
following the global recession, but a firmer rupee and rising
wages are key concerns.

“The rupee’s rise is definitely an issue that should be
addressed, but I think companies have understood it’s part of
the business and so they will manage the rupee’s rise,” said
K.K. Mital, head of portfolio management services at Globe
Capital.

For April-June, Wipro expects IT services revenue between
$1.19 billion to $1.215 billion, compared with $1.166 billion
in January-March.

Wipro hopes to maintain or improve profit margins in the
fiscal year that ends in March 2011, Chief Financial Officer
Suresh Senapaty said on Friday, adding that the pipeline of
deals was “far better” than the previous quarter and a year
ago.

Stock Market Advice

($1= 44.4 rupees)
(Additional reporting by Pratish Narayanan and Janaki
Krishnan; Writing by Devidutta Tripathy; Editing by Ranjit
Gangadharan and Anshuman Daga)

UPDATE 3-India’s Wipro results lag rivals; tech demand improves