Wipro Q1 net up 12.5% at Rs 2,388 crore, IT Services margin at 18.4%

Wipro on Wednesday reported a 12.5 per cent rise in its consolidated PAT (profit after tax) or net profit at Rs 2,387.6 crore for the quarter ended June 30, 2019. The IT services company had posted PAT of Rs 2,120.8 crore in the year-ago period. Sequentially, the numbers dropped 3.86 per cent. 

Revenue for the period came in at Rs 14,716.1 crore, up 5.28 per cent YoY.

Basic earnings per share (EPS) for the quarter under review stood at Rs 3.97 against Rs 3.53 in the year-ago period and 4.13 in the previous quarter. EBIT margin declined 90 bps to 18.4 per cent QoQ. 

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“We delivered IT Services margins of 18.4 per cent and Free Cash Flows (FCF) of 98.8 per cent of our Net Income. We had a slower start to the year, we however remain focused on our operations and continue to invest in talent and capabilities for the future,” said Jatin Dalal, chief financial officer at Wipro in a release.

Analysts at Motilal Oswal Financial Services had pegged profit after tax (PAT) at Rs 2,500 crore. On a sequential basis, however, MOFSL saw a flat growth in PAT of 1.5 per cent over as compared to Rs 2,483.5 crore clocked during the January-March 2019 quarter.

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The fall in EBIT margins was in line with expectations. Analysts at Edelweiss Securities, for isntance, had pegged a 90 basis points (bps) fall in the adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) margins, owing to wage hikes and a strong rupee. 

In its press released, the company said "during the three months ended June 30, 2018, the Company had reduced its equity holding from 74 per cent to 11 per cent in Wipro Airport IT Services Limited. The loss/ gain on this transaction is insignificant." 

Going ahead, Wipro expects revenue from the IT Services business to be in the range of $2,039 million to $2,080 million for the quarter ending September 2019 (Q2FY20). This translates to a sequential growth of 0.0% to 2.0%.

Update on buyback

Wipro had earlier announced a buyback proposal for purchase of up to 323.1 million equity shares of Rs 2 each from the shareholders on a proportionate basis by way of a tender offer at a price of ₹325 per equity share. 

"After receipt of shareholders’ approval, the Company has filed the draft letter of offer for the buyback with SEBI. Upon receipt of approval from SEBI, we will complete the buyback process," the company said while releasing the Q1FY20 numbers.