IT services major Wipro continued to witness tepid revenue growth in the first quarter of the ongoing financial year owing to uncertainty in the macro environment apart from delay in closure of large projects.
Operating margins also dipped because of rising wage cost and higher expenses due to changing onshore-offshore mix, in spite of the company reporting forex gains.
In the quarter ended June 30, the Bengaluru-headquartered company reported a 12.6 per cent rise in consolidated net profit (at Rs 2,387.60 crore) compared with the corresponding period in the previous fiscal. Net profit declined 3.86 per cent on a sequential basis owing to higher tax outgo apart from lesser revenue from operations.
Consolidated revenues of the firm rose 5.3 per cent year-on-year (YoY) basis to Rs 14,716 crore while it declined around 1.94 per cent on a sequential term.
IT services revenue, which contributes more than 95 per cent of its gross revenues, witnessed a sequential decline of 0.7 per cent at $2.038 billion in constant currency terms. On a YoY basis, it grew 5.9 per cent. The constant currency growth numbers were arrived at after adjusting the impact from the company’s divestment of its hosted data centre business along with Workday and Cornerstone businesses.
IT services revenues of $2.038 billion was below Bloomberg estimates for the quarter. It had pegged the figure at $2.16 billion. Wipro's constant currency growth numbers were also lower when compared with larger peers like Tata Consultancy Services (TCS) and Infosys. While TCS’s revenues grew 10.6 per cent YoY on constant currency term, it was 12.4 per cent for Infosys in the quarter under review. “We had a slower start to the year than expected, though it (IT services revenue growth) remained within our guided range of -1 per cent to +1 per cent for the quarter,” said Abidali Neemuchwala, chief executive officer & executive director at Wipro. “Q1 typically is a weak quarter for us and we entered the quarter with macro uncertainties,” Neemuchwala added.
For the second quarter, Wipro predicted its revenue to be 0-2 per cent, translating into $2.039 billon to $2.080 billion for the period.