Wipro Q3 net profit dips 2.17 pc to Rs 2,456 crore

IT services major Wipro on Tuesday posted a 2.17 per cent dip in consolidated net profit to Rs 2,455.9 crore for the December 2019 quarter, and estimated up to 2 per cent revenue growth for the fourth quarter.

Wipro's net profit, attributable to shareholders, in the year-ago period was Rs 2,510.4 crore.

Its revenue from operations grew 2.7 per cent to Rs 15,470.5 crore during the period under review from Rs 15,059.5 crore in the same quarter last year (as per Ind-AS). Earnings per share (EPS) for the quarter was Rs 4.3 per share and grew 3.2 per cent year-on-year.

The Bengaluru-based company's numbers came days after larger rival Infosys announced an almost 24 per cent jump in net profit, and 7.9 per cent rise in revenue. Infosys had exuded confidence in the demand environment and raised its revenue outlook for 2019-20 in constant currency to 10-10.5 per cent.

On Tuesday, Wipro, which gets bulk of its topline from IT services, said it expects revenues from that unit to be in the range of USD 2,095 million to USD 2,137 million in the March quarter. This translates into a sequential growth of flat to two per cent.

Wipro's IT services segment revenue was at USD 2,094.8 million in the December quarter, a sequential growth of 2.2 per cent. This is in line with its outlook of USD 2,065 million to USD 2,106 million guided earlier.

"We have delivered a good quarter with secular growth across all business units, geographies and practices. We remain focused on deepening our customer relationships, converting our funnel and winning large deals," Wipro CEO and Managing Director Abidali Z Neemuchwala said.

He added that in financial services, Wipro saw a slowdown in growth rates due to continued softness driven by the macro-economic environment.

"We however remain confident on winning the new deals that we are participating in leveraging our strong capabilities in digital," he said.

Neemuchwala said "the overall demand environment has neither improved nor deteriorated, but we see some level of uncertainty due to the various geo political risks at play".

While the BFSI (banking, financial services and insurance) segment has seen some softness, Wipro remains confident of the deal pipeline. The company added 4 accounts to over USD 100 million accounts.

The company has seen strong growth in the digital business. Contribution from Digital now stands at 39.8 per cent, up 22.8 per cent on a year-on-year basis.

Wipro onboarded over 1,891 freshers in December quarter with the total headcount at 187,318. Voluntary attrition on last 12 months basis has reduced to 15.7 per cent.

"We continue to drive localisation (US local workforce is now 70 per cent), campus hiring, deepening employee engagement and make significant investments in training and skill development... we remain focused on deepening our customer relationship and converting our funnel, winning large deals that are due to close this quarter," he said.

Neemuchwala added that the company concluded the ITI acquisition this quarter, and the transaction will help it build momentum in Industry 4.0 and IoT offering and enable Wipro to have new set of clients to create differentiated value.

Wipro declared an interim dividend of Re 1 (USD 0.014) per equity share/ADS. The results were announced after the close of trading hours.

Sanjeev Hota, Head of Research at Sharekhan by BNP Paribas, said Wipro reported in-line revenue growth in constant currency terms.

"Q3 revenue growth guidance is on the expected lines. BFSI revenue growth remained tepid, while consumer and manufacturing business continued to perform well during the quarter...We continue to believe that Wipro would lag in revenue growth among its large peers..." he added.

Shares of Wipro closed at Rs 257.15, up marginally from the previous close on the BSE.