Wipro disappoints the bourses

Fri, 21 Jan 01:30 pm

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Indian indices continue to languish in the red as buying interest in heavy weights remained muted during the previous two hours. Stocks from IT and metal space are trading weak while stocks from the banking, oil & gas and consumer durable space are trading firm.

The BSE-Sensex is down by 21 points while Nse-Nifty is trading 10 points below the dotted line. BSE Midcap is up by 0.46% while BSE Small cap index is up by 0.7%. The rupee is trading at 45.69 to the US dollar.

<>IT stocks are mainly trading weak with Wipro leading the losses. Wipro released its 3QFY11 results. The company has reported a flat 0.6% QoQ growth in sales but a 2.6% QoQ growth in net income. The company witnessed a 4% QoQ growth in the IT services business (76% of total sales) and a 5% QoQ growth in the consumer care & lighting business (9% of total sales). The IT products business (11% of total sales) witnessed a decline of 18% QoQ during the quarter. Operating margins decline by 0.3% QoQ due to lower number of working days as well as lower utilization. The lower operating margins were offset by higher other income and lower interest expenses. But tax rates for the quarter stood at 16.5% as compared to 14.6% in the previous quarter.

The company's attrition rate rose to 21.6% as compared to 19.4% for the preceding quarter. It declared an interim dividend of Rs 2 per share.

Banking stocks are currently trading firm led by Bank of India, SBI, ICICI Bank and PNB. The stock of Yes Bank is finding favour amongst investors on the back of the bank reporting a good set of numbers for the quarter and nine month period ended December 2010. During 9mFY10, the bank reported a 65% YoY increase in interest income on the back of a 65% YoY increase in advances. Net interest income grew at a similar pace indicating that the NIMs (net net interest margins) remained flat (2.9% as compared to 2% during the corresponding period last year) during the period. The bank's bottomline grew by 55% YoY in 9mFY11 due to write back of provisioning and higher operating leverage.

As for the quarter ended December 2010, the bank reported an interest income growth of 80% YoY. However, as the net interest expenses increased at a faster pace, the bank's net interest income grew by 53% YoY. Profit growth during the quarter stood at 52% YoY. As of 31st December 2010, the bank's gross NPA level stood at 0.23% and its capital adequacy ratio stood at a comfortable 18.2.