January 19, 2018 / 4:21 PM / in 9 months

UPDATE 2-India's Wipro upbeat on 2018 after quarterly profit dip

* Q3 net profit falls after one-time provision

* Predicts client spending boost in 2018 (Recasts, adds management and analyst comment)

By Sankalp Phartiyal and Tanvi Mehta

BENGALURU, Jan 19 (Reuters) - India’s third-largest software services exporter Wipro expects significant growth in its high-margin digital business this year, it said on Friday after reporting a quarterly profit dip on one-off provisions.

The company posted net profit down 8.5 percent year on year in the three months to Dec. 31, but CEO Abidali Z. Neemuchwala told a news conference that it expects some big deals in the digital business and increased overall client spending in 2018.

Finance chief Jatin Dalal said that the digital segment, which includes services such as cloud computing, big data and design engineering and now constitutes about a quarter of the company’s IT revenue, would remain a key focus area.

“Digital has the biggest growth potential,” Dalal told Reuters, adding that the company is ramping up investments in Latin America and continental Europe.

Wipro said the number of clients contributing revenue of more than $50 million rose to 41 as of Dec. 31, compared with 33 a year earlier.

Sarabjit Kour Nangra, IT analyst at Mumbai’s Angel Broking, said that while Wipro has been improving operating performance, revenue growth remains “muted”.

“As we move into FY2019, for Wipro it’s imperative it grows its sales, along with improving operating leverage,” she said, referring to the financial year starting in April.

Wipro had earlier posted net profit of 19.31 billion rupees ($303 million) in the three months to Dec. 31, lagging analysts’ estimates of 21.58 billion rupees. Profit was hit by a one-off provision of 3.18 billion rupees after a customer insolvency, it said without providing further detail.

The company also forecast that core IT services revenue in the first three months of 2018 would rise to between $2.03 billion and $2.07 billion rupees, compared with $2.01 billion rupees in the previous quarter.

Tata Consultancy Services, India’s top software services exporter, reported a dip in third-quarter profit last week and No.2 player Infosys posted better than expected profit, helped by a tax deal with the United States. (Reporting by Sankalp Phartiyal and Tanvi Mehta; Editing by David Goodman)

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