Wipro posts stable quarter — profit rises 3.2% with revenue guidance of 1.5% to 3.5% over the next three months
- Despite a stable quarter, Wipro's share price dipped by over 6% when markets opened on Wednesday, October 14.
- Wipro profits rose by 3.2% in the last three months and its revenue grew by 2% on a constant currency (CC) basis.
- The Indian IT services company pegs its outlook for IT services in the third quarter between 1.5% and 3.5% revenue growth.
- It also announces its acquisition of US-based engineering services company Eximius Design, which will likely be included in its third quarter earnings.
AdvertisementWipro saw its profits gain 3.2% over the last three months to hit ₹2,466 crore. Revenue also recovered by 2% on a constant currency (CC) basis.
The Indian IT behemoth expects IT services to boom even further in the coming quarter. It has pegged revenue to grow by another 1.5% to 3.5% in the third quarter to between $2,022 million to $2,062 million.
Margins expanded by around 20 basis points — 100 basis points make up 1% — to hit 19.2%. "This was led by operational improvement of about 80 bps, off set by 60 bps in PAT of appreciated rupee," said CEO Theirry Delaporte during the earnings call.
"We were able to absorb the adverse impact of FOREX movements and still expand operating margins by 20bps," added CFO Jatin Dalal. Even though specific guidance was issued for margins, Dalal shared that the company plans to keep it within a narrow band, not accounting for unexpected currency fluctuations.
Its attrition level has improved to around 11%, with the company adding more than 30,000 employees to its roster over the last three months.
Despite a stable quarter, Wipro share price was down by over 6% on October 14. "After a strong and partly buyback-fuelled rally in the stock price, upsides will be modest,” added Kotak Institutional Equities in its report. Wipro's stock has had a pretty good run of late. In fact, its share price hit a new 52-week high on Monday of ₹379 a piece. So far this year, the company’s stock is up by 51.66%.
On the eve of its earnings, Wipro also announced a new acquisition of US-based Eximius Design. The company focuses on engineering services, with specialisation in semiconductor, software and systems design.
However, Wipro’s newest conquest will not account towards its second quarter earnings with paperwork likely to come through by the end of December.
“Our strategy is to focus on growth in prioritized sectors and markets led by vertical solution offerings,” said Wipro CEO Thierry Delaporte.
Wipro’s board of directors also approved the buyback of 237.5 million equity shares worth ₹9,500 crore at ₹400/share.
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