Wipro Q4 profit flat at Rs 2,276 cr, says local hiring to offset visa woes

Board approves bonus issue in the ratio of 1:1; standalone net rises 20% on sequential basis

Wipro, India’s third-largest software exporter, said its fourth-quarter profits grew 0.4 per cent to Rs 2,267 crore on a 2.6 per cent higher revenue of Rs 13,987.5 crore, as the digital, energy and utilities business increased.

The Bengaluru-based company said IT services revenue grew 2.7 per cent over the previous quarter to $1.96 billion. For the fourth quarter of 2016-17, Wipro had projected a revenue of $1.92-1.94 billion. The company’s operating margin, calculated as sales minus expenses, rose 0.7 percentage points to 18.3 per cent.

Wipro expects revenue of $1.92-1.96 billion in the first quarter of 2017-18, following project cancellations and a slow retail business. “We delivered revenues within the guidance range in the fourth quarter,” said Abidali Z Neemuchwala, chief executive officer of Wipro. “We are confident that the recovery in energy and utilities and our demonstrated strength in digital will help us improve our growth trajectory during the course of the current financial year.” 

The company hired a net 8,570 employees during 2016-17.

Wipro, which announced bonus shares, promised a share buyback by July. It also extended the tenure of its chairman and managing director, Azim Premji, by two years, indicating there could be a delay in son Rishad Premji, a board member, taking up the top job.

“Wipro’s results were a mixed bag with revenues coming marginally higher and margins slightly lower than expectations. The guidance for the first quarter of 2017-18 is due to cancellation of projects in the health care business as well as challenges in the retail vertical. This reflects the need for better account management at Wipro,” wrote Dipen Shah, senior vice-president at Kotak Securities, in a note.

Neemuchwala said he was confident of a revival of business as Wipro executed a strategy to expand digital, hire locally and offer newer solutions to customers. “Our confidence of the recovery stems from expectation of HPS bottoming out, the India business recovering, BFSI accelerating, and the energies and utilities vertical picking up,” he said.

Wipro’s business in the fourth quarter was in line with that of its rivals. Infosys’ profits during the quarter declined 0.2 per cent to Rs 3,603 crore and its revenue grew 3.4 per cent to Rs 17,120 crore. The company reported an operating margin of 24.6 per cent during the quarter. Tata Consultancy Services saw fourth-quarter profits and revenue rising 4.2 per cent to Rs 6,608 crore and Rs 29,642 crore on an improved digital business. Currency volatility, however, hurt its margins. For 2016-17, Wipro grew the slowest among its peers. Its IT services revenue grew 4.9 per cent to $7.7 billion, against TCS’ 6.2 per cent growth to $17.58 billion and Infosys’ 7.4 per cent growth to $10.21 billion.

Wipro said it was investing in development centres and would use campus hiring to offset visa restrictions in the US, UK, Australia and Singapore.

Neemuchwala has set a target of $15 billion revenue for Wipro by 2020. He said the company was working in that direction.