Wipro, India’s third largest IT services exporter, has reported a marginal decline of 0.9% in net profit on a sequential basis for the December quarter, due to cross-currency movements and a slower business momentum. This also reflected in a dip in its revenues resulting in a performance which was below market expectations. The net profit at the end of the quarter stood at $309 million as compared to $312 million in the second quarter of the fiscal.
The revenues from the IT services business of Wipro stood at $1.90 billion, a sequential dip of 0.7% that was below the revenue guidance it had provided earlier of 0-2%.
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For the fourth quarter of FY17, Wipro has provided a revenue guidance in the range of $1.922 billion to $1.94 billion which translates into a sequential growth rate of 1-2%.
Given this guidance, it looks like Wipro will close the financial year with a revenue growth of below 5%.
The Wipro scrip closed at R473.45 on BSE on Wednesday falling 1.59%.The financial performance of Wipro mirrors the trend in the Indian IT industry where peers like Tata Consultancy Services and Infosys recorded a flattish or dip in revenue growth. TCS recorded a sequential revenue growth of 0.4% while it was a decline of 1.4% for Infosys.
The only company which grew above 1% was HCL Technologies at 1.3%.
In rupee terms, Wipro’s net profit for the quarter was R2,115 crore while the IT services business touched R13,196 crore.
Wipro also sounded cautious regarding the future. Abidali Neemuchwala, CEO said, “We do not expect customer budgets to change drastically; however, we do expect that there could be more on the change spends.”
The India IT industry is also keenly watching the likely policy changes by the new US President Donald Trump especially on the work visas and healthcare segment. Trump has indicated that he would bring certain changes in the H-1B visa programme.
“We are watchful on two specific areas of our business – one, the healthcare business which is going through a transition phase and spends are soft till clarity emerges on the policy direction,” Neemuchwala said.
Company to acquire Brazil’s IT firm InfoSERVER SA for $8.7 m Wipro has announced the acquisition of Brazilian IT firm services firm InfoServer SA for a cash consideration of $8.7 million. The company which is two decades old is focused on the Brazilian market providing custom application development and software deployment services.
According to Wipro, the Brazilian acquisition will help it expand into the LATAM market and it has offices in the five countries in the region – Argentina, Brazill, Chile, Colombia and Mexico.
This is the first acquisition by Wipro this year and the IT major has been one of the most active among the Indian companies on the inorganic front. The last acquisition made by Wipro was of US firm Appirio for $500 million in October last year.
The Appirio acquisition was the second largest buyout by Wipro in its history. Wipro also acquired US based firm – Healthplan Services for $460 million in February of 2016 which strengthened its presence in the healthcare segment.