Wipro has little reason to cheer on Q3 results

Mumbai, Jan 21: Wipro is in the news-making mode these days, with the new CEO TK Kurien taking over and the Q3 results coming out almost simultaneously amidst widespread speculation.

Though there was an improvement in comparison to the other quarters the results have not bought any positive surprises, says analysts.

Wipro reported a 9.60 per cent jump in consolidated net profit at Rs. 1,318.8 crore for the third quarter ended December 31, 2010, against a net profit of Rs. 1,203.2 crore in the year-ago period that failed to cheer the Dalal Street, they said.

"Wipro's third quarter results are below our expectation. Revenue growth was lower-than-expected, whereas PAT was in-line with our estimates. We expect the stock to see correction as results lack any positive surprise," said Prabhudas Lilladher, a stock broker.

Total Income has increased from Rs 70698 million for the quarter ended December 31, 2009 to Rs 80044 million for the quarter ended December 31, 2010. The total income has also seen an upswing at Rs 59786 million for the quarter ended December 31, 2009 to Rs 67876 million for the quarter ended December 31, 2010.

Reacting to the lower-than-expected quarterly numbers, Wipro's counter witnessed selling pressure and slipped by 4.2 per cent on the Bombay Stock Exchange (BSE). However, the scrip had outperformed the key index in the last two months on expectation of a good show in the October-December quarter.

The not-so-great results came out in the aftermath of the new CEO's taking charge. Analysts predict that the management shift could mean an impact on Wipro stocks as well. "There was no surprise element in the numbers. Wipro has effected management change. We expect the stock to be range bound, post the recent run-up. We prefer Infosys and TCS in large caps," Kotak Securities Senior Vice-President (PCG Research) Dipen Shah said.

Echoing Shah's opinion, Geojit BNP Paribas Financial Services AVP Gaurang Shah said, "The management rejig has made the investors cautious, as it is now a big responsibility for Kurien, who will alone handle the position held by two people earlier."

Besides, Wipro's performance has been subdued in comparison to its peers Infosys and TCS, which may dampen investors' sentiments, Shah added.

PTI