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  1. Wipro Q1 net profit increases 16.2%, beats Street estimates

Wipro Q1 net profit increases 16.2%, beats Street estimates

Beating Street expectations, the country’s third largest software company Wipro on Friday posted a 16.2% increase in its net profits (quarter-on-quarter) for the April-June period, fuelled by the strong performance of the BFSI business.

By: | Bengaluru | Published: July 21, 2018 3:55 AM
Representative Image : Reuters

Beating Street expectations, the country’s third largest software company Wipro on Friday posted a 16.2% increase in its net profits (quarter-on-quarter) for the April-June period, fuelled by the strong performance of the BFSI business. The sale of the company’s hosted data centre services business to Ensono was also reflected in the results.

The company reported a net profit of Rs 2,093 crore while consolidated revenues stood at Rs 14,827 crore, registering a sequential growth of 3.6%. The company’s flagship IT services revenues stood atRs 13,700 crore.

In US dollar terms, the IT services reported a revenue of $2,026.5 million, which was at the higher end of the guidance on actual currency basis. The company has given a guidance for the second quarter of the year in the range $2,009- $2,049 million. This translates to a sequential growth of 0.3% to 2.3%, excluding the impact of the divestment of the hosted data centre service business, which concluded in the quarter ended June 30,2018.

 

Commenting on the performance, CEO and member of the board Abidali Neemuchwala said, “We entered the fiscal 2019 dealing with certain externalities. Based on the excellent execution by our team, we have seen pick-up in momentum in our global business ahead of our expectations and have delivered 0.1% growth in constant currency terms.”

“We have seen pick-up in spending in the developed markets, particularly in North America and BFSI,” he 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.

The company’s digital revenue increased 6.2% sequentially in constant currency terms and contributes 28.1% of the overall revenues. The company trained over 97,000 employees in digital technologies.

“The Wipro results this quarter indicates a smart tactic of ‘under-promise and over-deliver’. Having initially lowered shareholder expectations on its FY19 Q1 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.

During the quarter, the company saw an attrition rate of 17%, a slight uptick from 15.9%, YoY. The company attributed this to the seasonality. The utilisation was at an all-time high of 85.2%. Answering to a query on campus hiring, Wipro president & chief human resources officer Saurabh Govil said the company’s campus hiring in the current fiscal will be higher than the previous year.

Wipro also said the localisation drive continued in the global markets and has reached 58% localisation levels in the US. The company continues to maintain strong localisation levels in Continental Europe, APAC and LATAM.  In terms of verticals, the BFSI segment performed well in the quarter and witnessed a sequential growth of 3.3%, while energy, natural resources and utilities saw a dip of 0.9% sequentially.  Wipro added 75 new customers during the quarter and the top 10 accounts grew 0.5% quarter-on-quarter and 0.8% YoY.

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