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Wipro Reports 2 Percent Jump in Q3 Profit

Wipro Reports 2 Percent Jump in Q3 Profit

By Indo-Asian News Service | Updated: 18 January 2016 13:04 IST

Global software major Wipro Ltd. hopes for a better fourth quarter (January - March) results after failing to meet its revenue target from the IT services business in the third quarter (Oct-Dec) of 2015-16 fiscal.

On the other hand, its rival Infosys beat street estimates and posted a robust growth in the quarter under review.

"We expect revenue from our IT services to be in the range of $1,875-1,912 million ($1,894 million average or roughly Rs. 12,799 crores average) in the (last) quarter ending March 31 (Q4) of this fiscal (FY 2016)," the IT bellwether said in a statement in Bengaluru on Monday.

Though the city-based outsourcing major said in October that revenue from its flagship business (IT services) would be in the range of $1,841-1,878 million (roughly Rs. 12,440 crores - Rs. 12,690 crores) for the quarter ending December 31, it reported $1,838 million (roughly Rs. 12,420 crores), a year-on-year (YoY) growth of 2.4 percent and 0.3 percent sequentially, with $1 at Rs. 66.99.

In constant currency, however, IT services revenue grew 6.3 percent YoY and 1.4 percent sequentially in dollar terms and nine percent YoY in rupee terms (Rs. 12,310 crores).

"We delivered revenues in line with our guidance. We saw a pick-up in large deal closures led by global infrastructure services," Wipro chief executive T.K. Kurien said in the statement.

The market reaction, however, was muted during early trading, with the company's blue chip scrip at Rs.2 per share value quoted at Rs. 541.60 after opening at Rs. 537.30 and slipping to Rs. 532 from Rs. 543.45 at the close of trading on Friday.

Earlier, the company reported Rs. 2,234 crores net profit for third quarter (Q3), registering a marginal two percent YoY growth and flat sequentially.

Consolidated revenue for the quarter under review increased seven percent YoY and 2.8 percent sequentially to Rs. 12,861 crores.

Under the International Financial Reporting Standard (IFRS), the net income of the company is $338 million (roughly Rs. 2,284 crores) and gross revenue $1,943 million ($1.94 billion or roughly Rs. 13,130 crores), including $1,838 million ($1.84 billion) from IT services business.

"It is becoming increasingly clear that customers want to simplify operations and optimise their IT spend while investing in digital to transform their businesses. We are well-positioned to take advantage of this trend," Kurien said.

Operating margin for IT services business declined to 20.2 percent from 20.7 percent in the second quarter and 21.8 percent in like period year ago.

Client acquisition declined to 39 from 67 a quarter ago and 44 a year ago, though the total number of active customers went up to 1,105, which is marginally up from 1,100 a quarter ago and substantially from 1,018 a year ago in the same period.

"We are focused on driving market share growth in our core business through integrated domain and technology services, while investing for the future in building differentiated digital capabilities," chief executive-designate Abidali Z. Neemuchwala said in the statement.

In a top management rejig on January 4, Kurien was elevated as vice-chairman and chief operating officer Neeuchwala promoted as the new chief executive from February 1. Kurien will, however, report to chairman Azim Premji till March 31, 2017.

The IT services division added 2,268 new employees during the quarter, taking the headcount to 170,664 from 168,396 a quarter ago and 156,866 a year ago.

Overall attrition declined fractionally to 16.3 percent from 16.4 percent a quarter ago and 16.5 percent a year ago; 13,239 people from sales and support staff in IT services left the company in the third quarter as against 13,068 a quarter ago and 11,603 a year ago in the like period.

"We have built competitive differentiation through the acquisition of two firms - Cellent AG and Viteos during the quarter. The impact on revenue from the Chennai floods were minimised by business continuity plans which, however, impacted operating margins for the quarter," chief financial officer Jatin Dalal said.

The company also declared interim dividend of Rs. 5 per share of Rs. 2 face value or 300 percent for this fiscal.

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