Wipro Forecasts Muted Revenue Growth In Q4 Amid Visa Curb Worries
Wipro’s profit and revenue in constant currency terms met analyst estimates.
Wipro Ltd. expects a muted revenue growth in the quarter ending March 2017 amid concerns over possible protectionist policies in the U.S., its biggest market.
The country’s third largest IT services company sees revenue from the IT services business to be in the range of $1,922-1,941 million in the fourth quarter, the company said in a media statement. That translates into a growth of 1-2 percent, the weakest among peers. The management had guided to IT services revenue between $1,916 million and $1,955 million for the quarter ended December 2016.
In order to prepare itself for possible U.S. visa regulatory changes, Wipro has been focusing aggressively on localisation, Chief Executive Officer Abidali Neemuchwala said at the press briefing.
Over time Wipro has positioned itself comfortably in a business model where lower number of visas are issued and we have significantly made local delivery center investments across the U.S. and we continue to hire in those campuses. While we feel comfortable working in the target environment, we believe that the visa regime or any employee mobility regime should be fair across industry and equally applicable to all players in the industry.Abidali Neemuchwala, CEO, Wipro (Source: Press Briefing)
Indian IT companies depend on H-1B work visas to send their developers and engineers to the U.S. to service clients. Wipro’s bigger rivals Infosys and TCS also said earlier this month that they were preparing for possible adverse changes in U.S. visa rules under Donald Trump.
Wipro registered a humble 1.7 percent profit growth in the October to December quarter of the financial year 2016-17, marginally beating analyst estimates. Net profit rose to Rs 2,110 crore from Rs 2,074 crore in the previous quarter, the company said in a filing to stock exchanges. Analysts tracked by Bloomberg had pegged the bottom line at Rs 2,094 crore.
Revenue fell 0.9 percent to Rs 13,765 crore in constant-currency terms, marginally beating the estimate of Rs 13,679 crore on a sequential basis. In U.S. dollar terms, revenue declined 0.7 percent at $1,902.8 million from $1,916.3 million in the last quarter.
The dollar revenue for IT services business slipped against last quarter’s guidance.
Earnings before interest and tax rose 1.2 percent to Rs 2,324 crore while EBIT margins expanded to 16.9 percent from 16.5 percent over the quarter.
“We expanded operating margins by 50 basis points in a seasonally weak quarter and generated strong operating cash flows by disciplined execution. We are significantly leveraging HOLMES, our automation suite to drive efficiencies in our operations,” Jatin Dalal, Chief Financial Officer of Wipro, said in a separate media statement.
Among the various verticals, constant-currency revenue growth was led by communications (which grew 0.8 percent quarter-on-quarter), energy (up 2.1 percent quarter-on-quarter).
The Americas (up 1 percent quarter-on-quarter), Asia Pacific and other emerging markets (up 1.7 percent quarter-on-quarter) and Europe (up 1.3 percent quarter-on-quarter) led the growth among geographies.
Wipro also announced that it will acquire InfoSERVER, an IT Services provider for banking and financial services in Brazil, for $8.7 million. In an interview with BloombergQuint on the sidelines of the World Economic Forum at Davos, Neemuchwala had spoken of focusing on acquisitions to stay ahead of the technology curve.