The country’s fourth largest IT services firm, Wipro on Friday reported a sequential decline in net profit for the October-December quarter even as revenue rose ahead of Street estimates, with earnings weighed down by one-time labour code-related charges and restructuring costs.
The company posted a consolidated net profit of Rs 3,119 crore, down 3.9% quarter-on-quarter from Rs 3,246 crore and below Bloomberg estimates of Rs 3,353 crore.
Wipro said profit was impacted by a Rs 303-crore charge towards gratuity expenses arising from the implementation of the new labour codes, along with a Rs 263-crore restructuring cost, largely linked to changes in its Europe operations and Capco, its UK-based consultancy arm.
Adjusted for the labour code impact, net profit for the quarter would have been about Rs 3,360 crore, implying a sequential increase of around 3.5%.
Revenue and AI Growth
Revenue from operations rose 3.8% sequentially to Rs 23,556 crore, marginally higher than Bloomberg’s estimate of Rs 23,431 crore. The growth was driven by AI-led deals and continued traction in the Americas region. Earnings before interest and tax declined 1.7% sequentially to Rs 4,296 crore, below Bloomberg estimates of Rs 4,603 crore.
“We are seeing a continued flow from last quarter in terms of our deal momentum, vendor consolidation and a very clear shift towards AI-led transformation,” CEO and Managing Director Srini Pallia said. He added that growth was broad-based, with three of the company’s four markets and four of its five industry segments reporting sequential gains.
The Americas 1 region posted both sequential and year-on-year growth, supported by demand in the consumer and healthcare verticals.
Total deal bookings during the quarter stood at $3.3 billion, with large deals accounting for $871 million, lower than the previous quarter’s $4.7 billion in total bookings and $2.9 billion in large deals. Pallia said the company was seeing a healthy mix of small and large deals and maintained that the pipeline remained robust.
On a year-to-date basis, Wipro has generated $13 billion in bookings, a 25% increase on a yearly basis.
Future Revenue Guidance
The company raised its revenue guidance for the March quarter, projecting IT services revenue growth of flat to 2% sequentially in constant currency terms. Analysts had been expecting growth of 1% to 3%, or up to 3.5% including the impact of the Harman acquisition completed last month.
Chief Financial Officer Aparna Iyer said the restructuring exercise had now been completed and that no further charges were expected. “Our IT services operating margins at 17.6% expanded both sequentially and on a year-on-year basis. This is our best margin performance in the last few years,” she said, adding that operating cash flow for the quarter was 135% of net income.
During the quarter, Wipro added 6,529 employees, taking total headcount to 2,42,021. Utilisation, excluding trainees, declined to 83.1% from 86.4% in the previous quarter, while attrition moderated slightly to 14.2% from 14.9%.
Chief Human Resources Officer Saurabh Gohil said the company continued to work with campuses to train and hire talent in specialised areas such as AI, data engineering and cybersecurity, though a decision on wage hikes has not yet been taken.