Wipro sees green shoots in some verticals

IT firm’s margin expands despite revenue fall in Q1

Information technology (IT) IT services major Wipro on Tuesday reported a better-than-expected quarterly performance in Q1 of FY21, as its profitability improved despite contraction in revenues on a sequential basis.

According to Wipro, some of its verticals have started witnessing green shoots though the Bengaluru-headquartered company refrained from giving any guidance on revenue front for the second consecutive quarter.

In Q1, Wipro’s profit before tax (PBT) grew 0.75 per cent at ~3,095.3 crore, compared to ~3,072 crore reported a year ago. In sequential terms, it grew 4.4 per cent.

The net profit of the IT major grew by 0.11 per cent year-on-year (YOY) at ~2,390.40 crore for the quarter ended June 30. It was 2.7 per cent higher over the previous quarter.

Consolidated revenue of the company increased 1.33 per cent YOY to ~14,913.10 crore in Q1FY21. On sequential basis, it dipped by 5 per cent.

Revenues from IT services segment, which contributes more than 95 per cent of its gross revenues, was at $1.92 billion, a decline of 4.4 per cent YOY and 7.5 per cent in sequential term.

“Looking at the situation, the team has done a great job. However, it will be too early to say anything (on projections). We want to go back to normal time and give guidance but (will do that) when the time is good for it,” said Thierry Delaporte, chief executive officer and managing director at Wipro. “I will challenge the status quo. That is my nature. I will simplify processes internally to focus more on customers. Our focus will be on profitable growth,” he added.

Operating margin expanded by 140 basis points (bps) at 19 per cent in Q1 of FY21 over the previous quarter on the back of rupee depreciation and operational improvement.

“We have done a lot in managing our general expenses and other costs. We got a benefit of around 1 per cent from rupee and another 1 per cent from operational improvement,” said Jatin Dalal, chief financial officer at Wipro. According to the company, it has created a buffer provision to deal with any contingency arising out of the pandemic.

The total headcount of the firm fell by 1,082 at 181,804 at the end of June quarter on sequential basis. Attrition at the IT firm declined by 170 bps on sequential basis at 13 per cent.

“We have never stopped hiring. Our gross hiring in the first quarter was at 7,000 and we will continue to hire in the second quarter. We will start onboarding freshers towards the end of Q2. We will not renege on any offers,” said Saurabh Govil, president and chief human resources officer at Wipro.

The IT services major entered into an agreement to acquire Brazil-based lvla Servicos de lnformatica, a specialised IT services provider to financial services, retail and manufacturing sectors.