Poor show by Wipro as the tech giant sees 9.9% drop in net profit in September quarter

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Bengaluru | Updated: October 25, 2018 11:32:27 AM

Software company Wipro on Wednesday posted a 9.9% decline in its audited consolidated net profit (quarter-on-quarter) for the July-September period despite benefits for the rupee depreciation and a major big deal win.

In US dollar terms, the IT services revenues stood at ,041.2 million, which was at the higher end of the guidance on actual currency basis.

Software company Wipro on Wednesday posted a 9.9% decline in its audited consolidated net profit (quarter-on-quarter) for the July-September period despite benefits for the rupee depreciation and a major big deal win. The company reported a net profit of Rs 1,885 crore while consolidated revenues stood at Rs 14,541 crore, registering a sequential growth of 4.03%. The company’s flagship IT services revenues grew by 4.9% to Rs 14,377 crore.

In US dollar terms, the IT services revenues stood at $2,041.2 million, which was at the higher end of the guidance on actual currency basis. The company increased its guidance for the third quarter of the year in the range $2,028 million to $2,068 million, which translates to a sequential growth outlook of 1% to 3%.

Chief executive and board member, Abidali Neemuchwala said, “We won our largest deal to date and four of our Business Units grew over 4% sequentially in constant currency terms. The demand environment is robust, especially for digital transformation and enterprise scale modernisation services.”

“US continues to see pickup in growth across industry segments. Also, we are seeing better momentum in Asia Pacific and Emerging Markets which grew 7.9% sequentially on a constant currency basis. Demand environment and traction in the global markets continues to be strong especially for digital transformation and enterprise scale modernisation services,” Neemuchwala added.
Wipro also announced a takeover of US-based Alight Solutions’ India operations for a consideration of $117 million.

“This strategic partnership will enable Alight to accelerate investment in consumer-facing technologies and services across its health, wealth and cloud businesses by leveraging Wipro’s industry-leading strengths in automation, machine learning and data analytics,” said Neemuchwala.

Operating margin also fell by 260 basis points to 14.6% from 17.2% in the last quarter. The company’s digital revenue increased 13.4% sequentially in constant currency terms and increased its share of revenues to 31.4% of revenues with digital trained workforce crossed 100,000 mark. “The Wipro results this quarter indicate a smart tactic of ‘under-promise and over-deliver’. Having initially lowered shareholder expectations on its Q1FY19 performance through prior guidance for this quarter, it appears to have delivered higher than expectations,” said Sanjoy Sen, doctoral research scholar, Aston Business School, UK.

Saurabh Govil, president & chief human resources officer, mentioned that attrition has gone up compared to the last quarter and it is especially higher amongst more experienced employees but the company’s utilisation reached an all time high of 85.5%. Wipro continued its localisation drive this quarter and said that localization in the US, a key market for the company crossed 60% with similar trends in Western Europe. In terms of verticals, the BFSI segment continued to dominate with a 0.7% sequential growth. while manufacturing, technology and health saw saw dips. Wipro added 76 new customers during the quarter and the top 10 accounts grew 0.5% quarter-on-quarter and 0.8% YoY.

The company announced the appointment of Arundhati Bhattacharya, former chairperson of SBI, to its Board of Directors for a period of five years effective January 1, 2019, subject to the approval of shareholders.

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