Wipro profit misses expectations

Wipro is held 84 percent by its chairman, Azim Premji. Story Tools

BANGALORE, India (Reuters) -- Indian software services exporter Wipro reported a five percent rise in quarterly profit on Friday, helped by growing outsourcing business, but the numbers fell short of market expectations.

The results came a week after larger rival Infosys Technologies beat profit estimates and raised its full-year earnings forecast, sparking a rally in software shares.

Wipro Ltd, India's No. 3 software exporter after unlisted Tata Consultancy Services and Infosys, has lagged behind its rivals in earnings growth because it focused on the battered telecom industry.

Wipro is 84 percent-owned by 58-year-old Chairman Azim Premji, India's richest man.

The company said net profit rose to 1.78 billion rupees ($38.51 million) in the fiscal first quarter ended June 30, according to U.S. accounting standards. That compared with a profit of 1.7 billion rupees a year ago, restated from an initial 1.84 billion rupees.

Revenue rose 28 percent to 11.7 billion rupees.

"At first glance the numbers appear to be below market expectations," said Dipankar Choudhury, software analyst with ICICI Securities.

Wipro forecast its global IT services revenue for the second quarter at about $210 million, up 5.6 percent from the preceding quarter.

"The environment is one of volume growth coupled with an appreciating rupee," Premji said in a statement.

Indian firms have benefited from growing global demand for outsourcing to cheaper locations but discounts to slowdown-hit clients amid fierce competition have sliced profit margins.

A strengthening Indian currency and higher wage costs have also hurt the country $9.5 billion-a-year software export sector.

Bangalore-based Wipro employs 13,000 staff and has about 300 clients including General Motors and Nortel Networks.

The results came before start of trading on Friday.

Shares of Wipro have risen about six percent in the past three months, underperforming a 14 percent rise in Bombay's infotech index and a 23 percent rally in the broader 30-share index.

Wipro's shares are down about 5.8 percent in Friday trading at 883.90 rupees.

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