India's Wipro shares dive after business split

Apr 09, 2013

Shares in India's third-biggest software firm Wipro tumbled more than 11 percent on Tuesday, its first day of trading as a standalone IT company since it hived off other businesses into a separate unit.

The Bangalore-based company announced the demerger of its non-technology operations into a separate, unlisted firm in November but only became a standalone IT company on the stock exchange Tuesday.

Wipro fell as much as 11.41 percent to a day's low of 397.25 rupees on the before retracing slightly to trade 11.05 percent lower at 398.90 rupees in the afternoon.

The tumble reflected that the earnings from its non-IT businesses will no longer contribute to Wipro's , analysts said.

However, they said they saw Wipro's demerger as ultimately a positive step that will help it to focus on its core IT business and make it more competitive.

A new unit, Wipro Enterprises, has been set up to embrace its consumer care, lighting, furniture, infrastructure and medical businesses.

Wipro's billionaire chairman Azim Premji inherited a cooking oil company and transformed it into a leading outsourcing services firm, which competes with rivals such as Infosys and .

IT services contributed 86 percent of Wipro's revenues in the financial year to March 2012.

Earlier this year, Wipro, which is also listed on the , said its third-quarter net profit jumped 18 percent from a year earlier, led by outsourcing orders, despite global uncertainty.

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