At Rs 2,659 cr, Wipro Q2 profit misses estimates | The Financial Express

At Rs 2,659 cr, Wipro Q2 profit misses estimates

IT major projects modest Q3 revenue growth guidance at 0.5-2.0%

At Rs 2,659 cr, Wipro Q2 profit misses estimates
The revenue narrowly missed Bloomberg estimates of Rs 22,581 crore.

IT services major Wipro on Wednesday said its net profit rose 3.7% sequentially to Rs 2,659 crore in the September quarter, coming in below Bloomberg estimates of Rs 2,847 crore. On an annual basis, however, net profit declined about 9% due to a higher one-time tax benefit in the same quarter of the previous fiscal.

Revenue for the quarter grew 14.6% annually and 4.7% on a sequential basis to Rs 22,540 crore on the back of a strong demand environment for cloud, digital engineering and cybersecurity services. The revenue narrowly missed Bloomberg estimates of Rs 22,581 crore.

The company expects revenue for the third quarter ending December to be in the range of $2.81-2.85 billion, which translates to a sequential growth of 0.5-2.0%, lower than the 3-5% it had guided for the September quarter. Unlike Infosys, which guides for the full fiscal, Wipro typically guides for the quarter ahead.

Also Read: HCL Tech Q2 net profit up 7 pc at Rs 3,489 cr; raises full-year revenue guidance

The modest guidance is keeping in mind a challenging macro-economic environment and a seasonally weak third quarter, said Thierry Delaporte, chief executive officer and managing director, Wipro, addressing the media in a conference. Wipro is, however, confident of achieving double-digit growth for the full fiscal.

The IT services revenue in dollar terms grew 4.1% sequentially and 13% on a year-on-year basis in constant currency to $2.80 billion on the back of some large deal wins as well as expansion in smaller deals.

“Our ongoing investments in high-growth strategic areas have allowed us to steadily increase our win rate and enhance the quality of our pipeline…As the market conditions evolve, I believe our comprehensive portfolio of differentiated offerings position us extremely well to serve the changing needs of our clients and help them face the challenges of an uncertain macro environment with confidence,” Delaporte said.

The operating margin narrowed to 15.1% in the September quarter from 17.8% a year ago, but showed a marginal improvement on a sequential basis from 15% in the preceding three months.

“We achieved margins of 15.1% in Q2 after absorbing the impact of salary increases and promotions. Our margin improvement was led by better price realisations and strong operational improvements in automation-led productivity,” Jatin Dalal, chief financial officer, Wipro, said.

The voluntary attrition rate, on the last 12-month basis, for the quarter rose to 23% from 20.5% a year ago, indicating that demand for tech talent continues to outpace supply, a trend seen across the industry. On a sequential basis, it, however, moderated from 23.3% in the June quarter, indicating that it is gradually coming down. “We expect further moderation in Q3,” Delaporte said.

In Q2, Wipro promoted about 10,000 employees and gave salary increases to 96% of its employees.

Wipro onboarded 14,000 freshers during the September quarter, taking the total headcount to 259,179 employees as of September 30.

As part of his efforts to turn around the company, Delaporte has been executing a five-point strategy he laid out soon after joining the company. The strategy involves accelerating growth through prioritisation of sectors and markets, strengthening relationships with strategic clients and partners, enhancing the company’s portfolio of business solutions, building talent at scale, and simplifying the operating model.

Effective January last year, Wipro reorganised its IT services segment into four strategic market units, all of which projected strong growth. On an annual basis, while Americas 1 and Americas 2 grew 15.3% and 12.3% respectively in constant currency, Europe grew 11.9%, and Asia Pacific Middle East Africa (APMEA) region grew 11.3% in constant currency.

The two global business lines – iDEAS (Integrated Digital, Engineering & Application Services) grew 15.2% while iCORE (Cloud Infrastructure, Digital Operations, Risk & Enterprise Cyber Security Services) grew 9.2% year-on-year in constant currency.

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First published on: 13-10-2022 at 03:00:00 am
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