Posts Tagged ‘Wipro’

Buy Wipro; target of Rs 650: PLilladher

October 29th, 2014

“Wipro reported weaker than expected performance for Q2FY15, with revenue and margin missing the expectation. Moreover, the guidance was softer than PLe/Consensus expectation. Management is still confident of improving growth momentum in H2FY15 on the back of large deal wins. Moreover, return of discretionary spend in the US and Outsourcing penetration in Continental Europe makes demand outlook healthier. Retain “BUY”.” Outsourcing50

“Wipro reported Q2FY15 results below expectation. IT Services (USD) revenue grew by 1.8% QoQ (3% @cc, PLe/Cons.: 3%) to US$1,772m (PLe: US$1,792m, Cons: US$1,795m). Overall revenue grew by 4.9% QoQ to Rs116.8bn (PLe: Rs115.8bn, Cons.: Rs116.8bn). Operating margins eroded by 175bps to 18.6% (PLe: 20.0%, Cons: 20.5%), due to wage hike and cross currency movement. EPS declined by 1% QoQ to Rs8.47 (PLe: Rs8.90, Cons: Rs8.61). H2FY15 likely to be stronger, but client specific issues drags near term: Management continues to assert for stronger H2FY15 than H1FY15. However, the weakness in Q3FY15 guidance was attributed to ramp‐down in selected clients in Commodity related sector due to weakness in price. However, there is no loss in wallet‐share with clients. The management sees improvement in deal pipeline along with improved win rate. We expect revenue growth to accelerate in Q4FY15 yielding stronger FY15 exit rate. Wipro total headcount grew by 4.6% QoQ, the strongest since Q3FY10. The company continues with their JIT hiring along with equal mix of fresher and lateral. We see strong employee addition as an early indication of planned ramp‐ups ahead. Moreover, the management sees uptick in utilization from the current level.”

“We see improvement in the win rate to drive revenue momentum in CY15, along with available margin levers that would accelerate earnings momentum. However, we see near term weakness in stock due to weaker than expected guidance. We retain “BUY” rating, with a revise TP of Rs650, 16x FY16E earnings estimate,” says Prabhudas Lilladher research report.

Source:http://www.moneycontrol.com/news/recommendations/buy-wipro-targetrs-650-plilladher_1212978.html

Wipro plunges over 4% as Q2 results disappoints Street

October 24th, 2014

Shares of WiproBSE -3.60 % plunged over 4 per cent as the market opened for Samvat 2071 muhurat trading as the Street was disappointed with its second quarter results.Outsourcing36
The company reported a consolidated net profit of Rs 2,085 crore during July-September quarter, down 0.9 per cent, against Rs 2,103.2 crore in previous quarter.

Sales in during the quarter increased to Rs 11,816 crore, up 12.4 per cent, from Rs 10,508.3 crore, QoQ.

The company sees Q3 IT services revenues at $1,808-1,842 million. Q2 EBIT margins stood at 22 per cent vs 22.8 per cent, QoQ.

“Wipro reported weaker than expected performance for Q2FY15, with revenue and margin missing the expectation. Moreover, the guidance was softer than PLe/Consensus expectation. Management is still confident of improving growth momentum in H2FY15 on the back of large deal wins. Moreover, return of discretionary spend in the US and Outsourcing penetration in Continental Europe makes demand outlook healthier,” said Prabhudas Lilladher report.

The brokerage has revised its target price to Rs 650.

“We see improvement in the win rate to drive revenue momentum in CY15, along with available margin levers that would accelerate earnings momentum. However, we see near term weakness in stock due to weaker than expected guidance,” the report added.

At 06:30 p.m.; the stock was at Rs 557.60, down 4.14 per cent, on the BSE. It fell 4.7 per cent intraday to touch a low of Rs 554.30.

Source:http://economictimes.indiatimes.com/markets/stocks/news/wipro-plunges-over-4-as-q2-results-disappoints-street/articleshow/44918083.cms

Wipro Sees Rosier End to Year as US Clients Spend

October 24th, 2014

India’s third-biggest software services firm Wipro Ltd , under pressure to improve lacklustre sales growth, said it saw a rosier end to the year as more confident US clients increase spending.Outsourcing35
Wipro, which provides outsourcing services for big-name clients such as US bank Citigroup, posted an 8 percent increase in second-quarter net profit on Wednesday, narrowly missing expectations. It said it continued to face “headwinds” in key accounts, particularly European clients.

But chief executive TK Kurien, appointed in 2011 to turn around the technology firm, said there were improvements ahead as discretionary spending returns in North America.

“We expect the revenue to come back in quarter four of this year or maximum quarter one next year,” Kurien told reporters. “But it will come back.”

For the quarter ended Sept. 30, Bangalore-based Wipro posted consolidated net profit of 20.85 billion rupees ($340.4 million). Analysts, on average, were expecting Wipro to make 21.09 billion rupees, according to Thomson Reuters I/B/E/S.

Total revenue rose to 118.16 billion rupees from 109.91 billion rupees in the same period last year.

“Overall the demand environment continues to hold steady. In North America we see discretionary spend returning,” Kurien said. He added the group saw opportunities in continental Europe, where outsourcing has yet to expand to US levels.

Wipro added 50 new customers during the quarter.

Kurien was picked to lead the company more than three years ago by founder chairman Azim Premji, after Premji sacked joint CEOs Suresh Vaswani and Girish Paranjpe.

Wipro, however, has struggled to catch up with rivals such as Tata Consultancy Services and Cognizant Technology . Peer Infosys has itself been hit by management changes over the last couple of years, but has reassured investors with a new chief executive. [ID:nL3N0S51OA]

“Infosys has now laid out their plans, so we know what the idea is. Wipro has talked about plans for some time, but it does not show on results,” Ankita Somani, analyst with MSFL Research said.

Wipro said it expected revenues from its IT services business to be in the range of $1.81 billion to $1.84 billion in the current quarter. For thee quarter ended Sept., the unit saw revenues of $1.77 billion.

Shares in Wipro closed ahead of the results at 583.65 rupees on Wednesday in the Mumbai market.

Source:http://gadgets.ndtv.com/others/news/wipro-sees-rosier-end-to-year-as-us-clients-spend-611146

IT: Prefer Infosys, TCS, Wipro says Prabhudas Lilladher

October 17th, 2014

According to ISG forecast, broader market ACV lagged, but remains strong YTD . The weakness was in‐line with expectation, and they expect to see a recovery in Q4CY14 with continued strength in CY15. They expect 2014 ACV to exceed 2013 by double digits despite tepid quarter.Outsourcing28

ISG highlighted about the challenges faced by IMS players as cloud infrastructure providers are denting the existing businesses of IMS players. However, ADM+BPO proposition sees a renewed sign of life as Digitization adoption drives newer spends in the segments.

Continental Europe continues to see stronger adoption for Outsourcing/Offshoring from geographies like France, Italy, Spain etc. However, the current trend is very different from earlier wave of Anglo‐Saxons outsourcing wherein India became the focal point of outsourcing centres. Current drive of outsourcing from Continental Europe is pushing for global delivery models  with presence in newer locations like Poland, Brazil, Philippines, etc. But, we do not see any loss in competency for Indian Vendors as they swiftly adopt for GDM.

Among the verticals, Financial Services grew strongly in Americas as new scope contracts return. In APAC and EMEA, manufacturing has witnessed strong growth.

Among the mid‐caps in our coverage universe, NIIT Tech and KPIT Technologies got mentioned in “The Breakthrough 10 Sourcing Standouts” (companies with revenue less than $2bn) in Americas.

CY14 has panned out in‐line with the expectation in terms of deal closures. According to ISG, a build‐up of transaction is likely to yield one of the strongest year in the last one decade. We see Digitization drive as an encouraging trend for Infosys that is in‐sync with their current commentary. We prefer Infosys  , TCS  , and  Wipro  among tier‐1

Source:http://www.moneycontrol.com/news/brokerage-recos-sector-report/it-prefer-infosys-tcs-wipro-says-prabhudas-lilladher_1205351.html

Indian IT firms like Wipro, HCL Tech likely to bid for CSC if it splits operations

October 3rd, 2014

Indian information technology companies, including Wipro and HCL Technologies, could bid for Computer Science Corp if the US-based IT company splits its public sector and commercial operations before putting itself up for sale. Senior executives at both Noida-based HCL Technologies and Bangalore-based Wipro said they could “consider” the commercial business of Computer Science Corp as it will help them scale up their presence in the United States and Europe.Outsourcing42

“Local data centres and existing IT infrastructure business can make for a risky, but good asset to buy—we will surely consider if it’s split,” said an executive at one of the top five Indian software firms. CSC has infrastructure business contributing 35% to its topline while global business services, including application services and consulting, account for 34% while the North American public sector brings the remaining 31%.

“If the business is split, HCL should be the favourite,” said a Mumbai-based analyst at a domestic brokerage, adding hat the company’s own application delivery business has not seen much traction and a buyout should help the company. CSC, which reported nearly $13 billion (Rs 80,000 crore) in revenues last fiscal, has reportedly reached out to private equity group, Blackstone and Bain Capital to gauge this interest in management-led buyout, Bloomberg reported on Tuesday. ET independently could not confirm if the company will split its commercial business operations from those of the government contracts. Both Bain Capital and Blackstone declined to comment while an email sent to CSC remained unanswered. Last year, CSC stitched a deal with country’s fourth-largest IT firm HCL Technologies under which the two firms aim to modernise applications run by their customers. The addressable market for applications services totaled $210 billion in 2014, according to Gartner’s 2014 Market Forecast for IT Services. Some experts, however, remain scepti cal if the company’s efforts in the two years are enough to entice interest from suitors. Indian IT firms like Wipro, HCL Tech likely to bid for CSC if it splits operations “The company has made efforts to transform its traditional consulting and outsourcing business and is embracing an operating model relying a lot more on software assets and platformbased delivery models,” said Frederic Giron, VP and research director, Forrester Research.

“But this is still the beginning of the journey and the transformation will require a lot more freedom of operation. Hence the idea of LBO (leveraged buyout), which would make sense taking the company private—similar to what Dell did.” Giron said the public sector chunk had about $4 billion in annual revenues.

“I believe Indian centric firms are interested in different types of acquisitions: software assets like Trizetto, targeted continental Europe presence like Alti, and potentially some digital capabilities.”

To be sure, twice in the past – 2006 and last year – management at CSC has tried to find buyers for the company but a deal could not be reached. The company, which employs nearly 79,000 employees and counts the US government as one of its 2,500 clients, ended last year with Rs 4,250 crore in cash.

Source:http://economictimes.indiatimes.com/tech/ites/indian-it-firms-like-wipro-hcl-tech-likely-to-bid-for-csc-if-it-splits-operations/articleshow/44056239.cms

IT veterans from Infosys and Wipro to help Dell treble services revenue in few years

September 23rd, 2014

Michael S Dell wants to more than treble the software services revenue in a “few years”, an ambition that the entrepreneur is betting on his team of leaders handpicked from Indian outsourcing giants such as InfosysBSE -1.36 % and Wipro. Outsourcing15

Significantly, the founder, chairman and CEO of the Texas-based computer hardware and services firm believes ever since going private, Dell has been able to focus more on clients without being distracted by “activist shareholders” and invest in some of the long-term strategies, including investing in cloud, security and analytics space.

“We want to double, triple, quadruple our (services) business,” Dell said in a phone interview last week, outlining his ambitions on services play for the first time. “There are 10 companies which have 1% of the $3 trillion IT industry, we have about 2%. We would want to have 3-4% in the years to come,” he said from Brussels where he’s been meeting customers. To be sure, Dell had a services unit in addition to selling desktops before it was taken private earlier this year.

The company first handpicked WiproBSE -0.70 % veteran Suresh Vaswani in December 2012 to steer its services business, who since then has aggressively built a core team by poaching executives from Infosys, Wipro and Hewlett Packard. “(But) remember the IT industry itself will be more than $3 trillion in years to come, and with internet of things (IoT), industry will grow beyond $3 trillion and we would want to bring solutions to capture a bigger share of the growing pie,” Dell said.

INSIDE DELL STRATEGY

The centerpiece of Dell’s turnaround strategy is based on combining existing IPs within to create software platforms and build newer solutions around disruptive technologies in IoT. Dell’s chest thumping on IP hinges on its aggressive play in acquiring companies — it has bought over two dozen firms in the last five years, from StatSoft in advanced analytics to SecureWorks in security space, thereby helping it provide end-toend solutions to its customers.

Over the past one year, Vaswani has been able to convince top Indian IT executives such as Anand Sankaran, a Wipro veteran, Prasad Thrikutam, a high profile Infosys leader among others, to join Dell — “the world’s largest startup” as described by its founder.

“If you look at the industry, it needs some freshness, and I will say we are providing that freshness,” Vaswani told ET in an interview. “Indian IT services come from a particular angle and HP, EDS are monoliths so to speak. We say a different story, and we don’t have legacy. And we have lots of IP.”

Thrikutam, who was hired by Nandan Nilekani in 1995 at Infosys, joined Dell last month. “Most companies have a constraint on which path they can take because if they are a public company, they have to follow quarterly targets. Michael said I can choose the path I want, so I have control over my destiny — that was the clincher for me to join,” Thrikutam said.

Source:http://economictimes.indiatimes.com/tech/ites/it-veterans-from-infosys-and-wipro-to-help-dell-treble-services-revenue-in-few-years/articleshow/43189559.cms

TCS leads Indian peers, says global survey

September 19th, 2014

Clients see Tata Consultancy Services (TCS) as the only local information technology (IT) company strong on two important parameters, implementation and innovation, said a study.Outsourcing8

It was conducted by America-based HfS Research and KPMG last month. The annual survey, state of services & outsourcing, covered 312 global clients, 347 advisors and consultants, and 420 participants from the companies that manage IT and business operations.

“IT-outsourced service providers, such as TCS, are leading the way in terms of buyer perceptions, both on innovation and execution, relative to their peers,” said Charles Sutherland, executive vice-president of research at HfS Research.

The country’s second- and third-largest in the sector, Infosys and Wipro, respectively, were seen as strong on implementation but weak on innovation. This could mean if their areas of execution become less significant, these may become candidates for churning, the report added.

Smaller companies iGate, Xerox, Fujitsu, Unisys and CSC scored low in the survey. “For these, the task ahead is to increase awareness of their capabilities and, in particular, to highlight investments in innovation,” said Sutherland.

Almost half the survey participants said they would look at switching their existing IT service providers for several reasons. While 15 per cent said they planned to do so at the renewal cycle, 12 per cent said they planned to move some or all of the outsourced work in-house. As many as 23 per cent said they wanted to switch their provider but were still working through the practicalities of doing so.

“Some of this (dissatisfaction) may be the result of long-standing contracts where it is harder to repeat the level of savings initially achieved and booked for first-generation contracts,” said Sutherland. “But when combined with the results of a perception study of the IT outsourcing service providers, it may be that the larger issue is the market is increasingly fragmenting and certain providers (specially some entrants like Amazon and Google) are just changing the market at such a speed, that a new level of dissatisfaction with the previous status quo is setting in.”

Source:http://www.business-standard.com/article/companies/tcs-leads-over-indian-peers-in-execution-innovation-114091801124_1.html

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