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Thursday, 18 October, 2001, 12:00 GMT 13:00 UK
Indian software giant beats forecasts
IT workers in India
India's IT industry is expected to show continued growth
By Sanjeev Srivastava in Bombay

Leading Indian software maker, Wipro, has beaten market expectations by reporting a 40% jump in earnings.

Profits at the Bangalore based company rose by 620m rupees to 2.16bn rupees in the July to September quarter.

Sales rose almost 16% to 8.74bn rupees, the company said.

The results were narrowly ahead of forecasts of analysts, who had expected earnings of 2.06bn rupees.

And Wipro chiefs reiterated that the company's growth in the year to March will outstrip the 30% expansion expected in the sector as a whole.

Chairman Azim Premji, however, warned that there have been some delays in closing large orders following last month's terrorist attacks against the US.

"The September 11 tragedy has resulted in several deferred customer visits and delays in closing large orders," Mr Premji said.

Company officials have also talked about the possibility of sales cycle lengthening because of a slowdown in the US economy.

Wipro said it had added 26 new clients - 11 of them from Fortune 1000 companies - over the three months.

But Wipro stock was trading 6 % lower at 1,110 rupees in afternoon trading in Bombay.

Analysts doubts

Analysts said they remained uncertain about future earnings despite robust growth this quarter.

Shyam MG, an analyst tracking the software sector for a leading Indian brokerage firm, told the BBC that while Wipro has talked about bettering the average growth rate in the Indian software sector, the company has not given a target growth rate.

"What if the industry average falls... after all these are uncertain times?" Mr Shyam said.

"So performing better than the industry average is like doing better than what can best be described as a moving target."

Analysts would have been more comfortable if the company had actually given a firm number of, say, 40% growth, he added.

Mr Shyam also said that while the initial response to the Wipro results was quite enthusiastic, detailed analysis, and a conference call with managers, revealed that nearly $10m of the figures were ascribed to earlier than scheduled execution of an order from UK firm Lattice.

US impact

Some analysts also remained concerned about the likely impact of US affairs on the earnings of Indian software companies such as Wipro, whose key clients include Nortel Networks, Cisco and Lucent Technologies.

According to Sushil Choksey, stock broker with Bombay based Rosyblue Securities, the almost continuous flow of bad news from the US makes the future environment increasingly uncertain for the Indian software companies.

NR Narayan Murthy, chairman of Indian technology giant Infosys, referred to this uncertainty last week while sticking to the company's growth forecast of 30 % for the entire year.

"There is so much fog on the windshield, he said.

" Nobody has a crystal ball to say what they will do.

"The only thing I can say is that we are in touch with a lot of prospects and there is a tremendous desire to do better and better."

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Suresh Senapaty, Wipro Chief Financial Officer
"Customers are able to source software services in India at much lower prices than overseas"
See also:

04 Oct 01 | Business
Indian economy smarts under crisis
17 Aug 01 | Business
India software industry fears rivals
20 Jul 01 | Business
Indian firms defy tech slowdown
10 Jul 01 | Business
Infosys profits jump
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