Wipro buying Brazilian IT firm InfoServer for $8.7 million

Wipro is planning to buy Brazilian IT services provider InfoServer for $8.7 million.

The acquisition is subject to customary closing conditions and approvals by regulatory bodies in Brazil. Representational Image. Image Source: Official Website

Software major Wipro on Wednesday announced acquiring Brazilian IT services provider InfoServer for $8.7 million (Rs 59 crore).

The Sao Paulo-based 20-year-old InfoServer provides custom application development and software deployment services in the Brazilian market.

"The acquisition will help us expand our presence in Brazil`s traditional and competitive banking, financial services and insurance (BFSI) market and add domain and process knowledge in the sector," Wipro said in a statement.

With some of the largest Brazilian banks as InfoServer`s marquee clients, the buyout aligns with Wipro`s aim to localise, expand its presence and become a partner of choice in the Latin America market.

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Wipro has offices in Argentina, Brazil, Chile, Colombia and Mexico across the region.

"As the LatAm (Latin America) market is a strategic growth and investment region for us, the acquisition will provide us with scale and key client relationships, especially in the BFSI domains, which are the largest and fastest growing sectors in the region," said Ankur Prakash, Wipro`s Vice-President and Head of New Growth and Emerging Markets.

The acquisition is subject to customary closing conditions and approvals by regulatory bodies in Brazil.

"We will combine our local domain knowledge with Wipro`s technological breadth and global experience to help our clients achieve their desired outcomes. Wipro`s delivery expertise and scale will help us expand our reach and offerings," said InfoServer Vice-President Fabiano Funari on the occasion.

The company on Wednesday also reported Rs 2,115 crore net profit for the third quarter (Q3) of 2016-17, a decline of 5.7% from Rs 2,246 crore over the same period last year.

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The city-based firm, however, projected marginally higher revenue for the fourth quarter (Q4) from IT services business.

"Revenue from our IT services business will be in the $1,922-1,941-million range for the fourth quarter ending March 31," said the company in a statement.

The slightly higher guidance is based on $1,903-million revenue posted for the third quarter though less than the projected $1,916-1,955 million in October.

Consolidated revenue for the quarter under review grew 6.4% to Rs.13,688 crore from Rs.12,861 crore in like period year ago under the Indian accounting standards.

Under the International Financial Reporting Standard (IFRS), net income translates into $309 million and revenue to $2,015 million in dollar terms.

Revenue from the flagship IT services business grew 3.5% annually to $1,903 million from $1,838 million year ago but declined sequentially 0.7% from $1,916 million quarter ago under the IFRS.

In rupee terms, revenue from IT services increased 7.2% annually to Rs.13,200 crore for the quarter under review.

Gross Profit from IT services segment also declined 1.3% to Rs.2,400 crore or $355 million on annualised basis.

Operating margin improved 50 basis points sequentially to 18.3% from 17.8% quarter ago but declined annually from 19.9% year ago.

"We expanded operating margins 50 basis points in a seasonally weak quarter and generated operating cash flows by disciplined execution." said Wipro Chief Financial Officer Jatin Dalal.

The IT services division added a record 108 new clients during the quarter as against 47 quarter ago and 39 year ago, taking the total to 1,259 as against 1,180 quarter ago and 1,105 year ago.

"Our investments in digital, BPaaS (Business Process as a Service) and cloud applications position us as the partner of choice for our clients. Digital ecosystem grew 9.9% sequentially in Q3 and constitutes 21.7% of our revenue," said Wipro Chief Executive Officer Abidali Z Neemuchwala in the statement.

The IT services business added 4,891 techies in the quarter taking the headcount to 179,129 from 174,2387 quarter ago and 170,664 year ago.

"In the last year, we have invested $1 billion in acquisitions, made six investments through Wipro Ventures, funded 8 ideas through Horizon programme, and continued to invest Ain our cognitive platform, Wipro HOLMES and in our stated localization strategy," added Neemuchwala.

The company`s blue chip scrip, however, lost Rs.7.65 or 1.59% lower to end at Rs.473.45 per share of Rs.2 face value (at par) as against the Tuesday`s closing price of Rs.481 and opening rate of Rs.479.10 on the BSE in Mumbai.

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