Wipro tumbles after Q2 PAT slips 3.4% YoY

Wipro fell 6.43% to Rs 351.60 after the IT major's consolidated net profit declined 3.4% to Rs 2,465.70 crore on 0.1% fall in net sales to Rs 15,114.50 crore in Q2 September 2020 over Q2 September 2019.

Sequentially, consolidated net profit rose 3.02% and revenue increased 1.35% in Q2 September 2020 (Q2FY21) over Q1 June 2020 (Q1FY21). Consolidated profit before tax (PBT) stood at Rs 3,207.30 crore in Q2FY21, gaining 3.61% from Rs 3,095.30 crore in Q1FY21. Total tax expense rose 5.72% to Rs 722.90 crore in Q2FY21 over Q1FY21. The Q2 result was announced after market hours yesterday, 13 October 2020.

Wipro's IT services segment revenue for the September quarter came in at $1,992.4 million, an increase of 3.7% quarter-on-quarter (QoQ). IT services operating margin for the quarter was at 19.2%, an expansion of 0.2% QoQ and 1.1% year-on-year (YoY).

Wipro expects revenue from its IT services business to be in the range of $2,022 million to $2,062 million in Q3 December 2020, a sequential growth of 1.5% to 3.5%.

Meanwhile, the board of IT services company today approved a plan to buyback 23.75 crore shares at Rs 400 per equity share for an aggregate amount not exceeding Rs 9,500 crore. This represents 4.16% of total paid-up equity share capital of the company as on 30 September.

Thierry Delaporte, the chief executive officer (CEO) and managing director (MD) of Wipro, has said that: "We had an excellent quarter with growth in revenues, expansion of margins and robust cash generation. I am very excited about the opportunities that are ahead of us and encouraged by the acceleration in business momentum we have seen this quarter. Our strategy is to focus on growth in prioritized sectors & markets led by vertical solution offerings."

Jatin Dalal, the chief financial officer (CFO) of the company, stated: "It was another quarter of strong performance on margins and cash flows. We improved on several operating parameters to deliver margin expansion of 0.2% to 19.2% in the IT Services segment. Our Free Cash Flows as a percentage of Net Income for the first half was at 160.7% of Net income. The announcement to buyback equity shares is part of our philosophy to deliver consistent returns to shareholders."

The company added 97 new customers in the quarter ending 30 September 2020. The IT major's attrition rate (on TTM basis) stood at 11% in Q2FY21 from 13% in Q1FY21.

Further, Wipro announced that it has signed a definitive agreement to acquire Eximius Design, a leading engineering services company with strong expertise in semiconductor, software and systems design. Eximius provides end-to-end solutions and services for building smarter, smaller and faster connected products for various use cases of loT, lndustry 4.0, edge computing, cloud, 5G and artificial lntelligence. The acquisition is subject to customary closing conditions and regulatory approvals and isexpected to close in the quarter ending 31 December 2020.

Wipro is a global information technology, consulting and business process services company.

Shares of Wipro have soared 120.30% from its 52-week low of Rs 159.60 hit on 19 March 2020.

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