Wipro today posted a 7.6 per cent drop in its second-quarter net profit and said it expects revenues in the ongoing quarter to be impacted by a “mixed demand environment”.
Mirroring impact of Brexit and global economic slowdown have had on Indian IT firms, the country’s third largest software services firm said it expects its IT service revenue for the October-December quarter of 2016-17 to be in the range of USD 1,916 million to USD 1,955 million.
With IT services revenue at USD 1,916 million in the September quarter, this would translate into a 0-2 per cent sequential growth.
The company also missed its own guidance of USD 1,931 million to USD 1,950 million for the July-September period, given at the beginning of the quarter.
The company’s net profit (after tax, minority interest and share of profit of associates) stood at Rs 2,070.4 crore in the quarter under review, down from Rs 2,241 crore in the year-ago period.
“As we look forward, the demand environment is mixed in a seasonally weak quarter affected by furloughs and lower number of working days,” Wipro Chief Financial Officer Jatin Dalal said.
Infosys CEO Abidali Z Neemuchwala said the third quarter is always a quarter where there are “several headwinds which come up and that creates a level of uncertainty”.
“Also, both the US elections and Brexit has the level of uncertainty that comes up, especially in the consumer segment though last quarter, we did see a high level spend constraint, new projects not coming in…,” he added.
The city-headquartered firm had posted a net profit (after tax, minority interest and share of profit of associates) of Rs 2,241 crore in the year-ago period.
Total income from operations rose by 10.5 per cent to Rs 13,897 crore in July-September quarter of this fiscal from Rs 12,567 crore in the same period a year ago, it added.
The results were announced after market hours.
Sarabjit Kour Nangra, VP Research (IT) at Angel Broking said the numbers were “lower than expected on the USD IT services sales terms, while on EBIT margins and net profit, it came in higher than expected”.
Wipro’s growth guidance is on similar lines as that of its larger rivals Tata Consultancy Services and Infosys.
TCS and Infosys posted muted numbers for the second quarter and said they were witnessing softness in the banking and financial services sector and client spending.
Infosys slashed its revenue guidance for the second time this year to 8-9 per cent.
However, HCL Technologies, which also announced its second quarter results today, exuded confidence in meeting its annual outlook of 12-14 per cent growth on constant currency basis.
While industry body Nasscom is yet to revise its export revenue growth guidance of 10-12 per cent for 2016-17, it has indicated that it may revisit the numbers.