Q3 Results: Wipro Profit Beats Estimate, Announces Bonus Shares
Wipro Ltd.’s profit for the three months ended December beat estimates.
Net profit rose 34.9 percent on a sequential basis to Rs 2,544 crore in the October-December period, India’s third-largest software services provider said in an exchange filing. That’s higher than the Rs 2,313 crore consensus estimate of analysts tracked by Bloomberg. The rise in the company’s bottom line may also be due to a low base owing to a one-time settlement with one of its key clients in the September quarter.
Wipro’s revenue rose 3.4 percent over the previous quarter to Rs 15,059 crore. The growth in revenue was aided by its $1.5-billion deal with U.S.-based Alight Solutions LLC. Its IT services revenue rose nearly 1.8 percent to $2,046.5 million. The company forecasts its fourth-quarter IT services revenue to be in the range of $2,047-2,088 million—a sequential growth of 0-2 percent. That compares with the street’s estimate of 1-3 percent growth.
Earnings before interest and taxes of the Bengaluru-based company rose 43 percent over the previous quarter to Rs 2,775.7 crore. That compares with Rs 2,577 crore estimate. Its margin rose 510 basis points sequentially to 18.4 percent. Analysts had pegged the margin at 17 percent.
Reliance Securities’ analyst Harit Shah attributed the surge in margin to the base effect. “If you leave the one-time settlement with a client in the previous quarter which was to the tune of Rs 510 crore, margins expanded by about 120 basis points which my initial guess is because of average rupee depreciation and cost efficiencies.”
The company also said it will issue bonus shares in the proportion of 1:3—one bonus equity share for every three fully paid-up equity shares held. The same amount of bonus will be available for the stock dividend on American depositary receipt, as on the record date, it said.
Besides, Wipro announced an interim dividend of Re 1 per equity share of par value, and Rs 2 each to the members of the company. The payment of the interim dividend will be made on or before Feb. 6.
Shares of Wipro closed 3.3 percent higher compared with a 0.6 percent advance in the NSE Nifty IT Index ahead of the earnings announcement.