Wipro net profit rises 6.9% sequentially in Sep quarter
BENGALURU: Higher revenue and favourable tax rates helped Bengaluru-based Wipro Ltd report on Tuesday a September quarter net profit of ₹2,552.6 crore, up 6.9% from the preceding quarter.
The company’s revenue for the second quarter came at ₹15,125 crore, up 2.8% quarter-on-quarter. The closely-watched dollar revenue for the information technology (IT) services segment came at $2.04 billion, marginally up 0.5% from $2.03 billion in the preceding quarter.
Wipro expects revenue from its flagship IT services business for the quarter ended December to be in the range of $2.06 billion to $2.10 billion, which translates to a sequential growth of 0.8-2.8%, backed by a robust pipeline of digital deals. The revenue growth forecast is higher than analysts’ estimates of 0-2%. Unlike Infosys Ltd which provides guidance for the full year, Wipro guides for the quarter ahead.
“The demand environment remains unchanged for IT spends, though there is an overhang of macro uncertainty in certain sectors. US market grew at 9.4% y-o-y (year-on-year) in constant currency while Europe is weak. We continue to see a robust pipeline and the momentum of order book in Q2 has been better than Q1,” Abidali Z Neemuchwala, chief executive officer (CEO) and managing director of Wipro said.
Operating margin for the IT services segment stood at 18.1%, an increase of 3.1% year-on-year and a decline of 0.3% sequentially. “We delivered operating margins in a tight range after absorbing the impact of two months of wage hike,” Jatin Dalal, chief financial officer (CFO), Wipro said in a statement. “Growth remains our priority and we remain invested for future.”
In response to a query from Mint, Dalal said the sequential rise in net profit was on account of higher revenue and favourable corporate tax rates under the new tax regime.
In the digital business, Wipro’s revenue grew 7% q-o-q and 29% y-o-y in constant currency and now contributes 39.6% of the total revenues. “Our global investments in digital have created the requisite presence, experience, and scale to support transformation not just in our core markets, but also in our growing markets, aligned to our geographic expansion strategy. We are winning integrated, transformational deals in Canada, Australia, APAC, and in our key markets of US and UK,” Neemuchwala said.
Banking, financial services & insurance, communication and healthcare remained weak during the quarter declining 0.9%, 2.6%, and 0.7% respectively on a sequential basis while consumer (retail) and manufacturing business performed well growing at 1% and 2.9% respectively.
The voluntary attrition for Q2 on a trailing 12-month basis stood at 17%, marginally down from 17.6% in the previous quarter. “The focus is on hiring from campuses and training them. Millennials are driven to join us because of the variety of clients and technologies they get to work with,” Saurabh Govil, HR head of Wipro.