Wipro management pins hope on wider margin and new clients while revenue takes a dip

Wipro Q1 earningsWipro
  • Wipro's share price is up by 16% on Wednesday, morning after the Indian IT giant reported its Q1FY21 results.
  • Wipro's revenue took a massive dip of 5.3% in Q1Fy21 as compared to the preview quarter.
  • The company’s profit was up by 2.1% quarter on quarter.
  • It has 42 new customers but most its revenue this quarter came from existing clients
Wipro’s revenue plummeted by 5.3% in its first quarter of 2020-21 but its profits were up by 2.1% quarter-on-quarter (QoQ). “We expanded the margins during the quarter, despite lower revenues, on the back of solid execution of several operational improvements and rupee depreciation,” said Wipro’s Chief Financial Officer (CFO), Jatin Dalal.

Wipro's profit over the last five quartersCompany filings/BI India

Wipro's stock price was up by 16% during the morning trade on Wednesday, after the company announced its Q1FY21 results.

Wipro's share price over the last monthBSE/BI India

A fact that played a factors in both profits and margins was foreign exchange. A weaker rupee helps Indian IT services companies because since they export most of their services, and so their billing is in dollars. "We have a taken a larger provision which is more call led, as per expected credit loss, which is driven by the environment not led by a specific situation or specific customer — or any specifics for that matter," Wipro's management told analysts during the earnings call.

Wipro's IT services margins over the last five quartersCompany filings/BI India

"The view is clearly to shoot for stabilisation of the revenue of the top line in the second quarter.," said Wipro CEO Theirry Delaporte during the earnings call.
The company has added 42 new customers to its docket, including 13 which are larger than $100 million including the John Lewis Partnership in the UK. It also entered into a strategic multi-year deal with Germany’s E.ON energy company. However, most of its revenue — 99.7% — comes from existing clients.

Wipro's gross revenue over the last five quartersCompany filings/BI India

With respect to hiring, Wipro plans to continue adding new employees to its roster in the coming quarter. “Lateral hiring never stopped. This quarter Wipro has hired 7,000 people gross and we’ve hired across the globe, wherever there was demand,” said Wipro's Chief Human Resources Officer, Saurabh Govil.

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