Wipro sees FY23 revenue growth at 11.5-12%, Q3 profit growth beats analyst expectations

• Indian IT services company Wipro issued revenue growth guidance of 11.5-12% for the full FY23 in constant currency terms.
• Its IT services revenue grew 0.6% sequentially in Q3 and 10.4% year-on-year in constant currency terms.
• The company reported total deal wins with a total contract value of $4.3 billion in Q3, with large deal wins amounting to over $1 billion.

Indian IT services company Wipro said on Friday that it expects its constant currency revenue to grow in the range of 11.5-12% for FY23.

It reported a 0.6% sequential growth in IT services revenue in constant currency terms in Q3, below analyst expectations of 1% growth. On a year-on-year basis, its constant currency IT services revenue grew at 10.4%.

Wipro reported a 14.3% year-on-year growth in revenue to ₹23,229 crore, marginally below analyst expectations. However, its net profit rose 2.8% YoY to ₹3,053 crore, compared to ₹2,969 crore in the same period last year, beating analyst expectations.

“Tech spending remains robust. Our clients are looking for value-driven transformation, tighter governance and improved return on investments. Cloud transformation continues to be a priority even as we seek a higher focus on returns,” said Thierry Delaporte, CEO and managing director, Wipro.

Its operating margins in the IT services segment witnessed a sequential increase of 120 basis points to 16.3% in Q3, from 15.1% in Q2. However, compared to the same period last year, its operating margin is down 130 basis points.

The margin recovery was led by automation-led efficiencies, said Wipro’s chief financial officer Jatin Dala, adding, “This expansion of margins was after absorbing the investments we made in our people by way of salary increases, promotions and long-term incentives for our senior leadership.”

Analysts at Nomura and Kotak Institutional Equities expected margins to grow between 40 and 60 basis points. The company declared an interim dividend of ₹1 per share.

Here’s Wipro’s latest earnings at a glance:


Source: Company reports

Tech spending remains robust, says Wipro

Wipro reported deal wins with a total contract value of $4.3 billion during Q3, growing at 26% year-on-year, while large deal wins stood at over $1 billion during the quarter.

Most of the major traction Wipro witnessed in terms of clients was in the over $1 million, and over $3 million segments – it added 10 clients in the over $1 million segment, and six clients in the over $3 million segment. Notably, it also added four clients in the over $10 million segment.

However, its client base remained stagnant in the over $50 million, over $75 million and over $100 million segments.

Delaporte struck a positive note, by saying, “Our ability to deliver on client objectives regardless of where they are in their cloud journeys is positioning us favourably in a consolidating market. As we move ahead, we expect to continue to benefit from these trends and help clients build future-proof, resilient enterprises.”

Attrition rate sees a sharp contraction

Wipro reported a contraction in its attrition rates for the fourth consecutive quarter. Sequentially, its attrition rate is down 180 basis points to 21.2%. It joins its peers, TCS, Infosys and HCL Tech which reported a moderation in attrition rates, too.

However, Wipro reported a reduction of 435 employees from its total headcount, which stood at 2,58,744 in Q3, as against 2,59,179 in Q2. Industry leader TCS also reported a decline in headcount by 2,197 employees.

On the other hand, Infosys and HCL Tech added 1,627 and 2,945 employees to their rosters, respectively.

Europe leads other regions in revenue growth in Q3

Despite the concerns of a slowdown in Europe, the region led IT services revenue growth in Q3, growing at 6% sequentially, followed by Americas 1, and Americas 2, the company reported.

“Our business in Europe continues to be a strong pillar of growth. Almost all the regions in Europe grew in double digits this quarter, led by the Nordics, UK and Ireland, Germany, and southern Europe,” Delaporte said.


Source: Company reports

SEE ALSO:

Overall demand scenario not changed significantly but Europe is a problem says TCS CEO

Infosys raises revenue guidance for FY23 to 16-16.5%, revenue growth beats analyst expectations

HCL Tech lowers revenue guidance for FY23 to 13.5-14%, Q3 revenue and profit growth beat expectations