Q2 Results: Wipro’s Profit Misses Estimates
Wipro Ltd.’s profit missed estimates as it recorded a loss from a one-time settlement with one of its key clients.
India’s third-largest software services firm’s net profit fell 9.9 percent over the previous quarter to Rs 1,886 crore. That fell short of the Rs 2,031-crore profit estimated by analysts tracked by Bloomberg. The company recoginsed a loss of Rs 514.1 crore from the settlement with its client during the quarter.
Revenue rose 2.4 percent to Rs 14,568 crore, aided by the company’s record $1.5 billion deal with Alight LLC in September. Analysts had estimated Rs 14,489 crore. Dollar revenue from software services rose 0.7 percent quarter-on-quarter to $2,041.2 million.
The firm forecast its third-quarter IT services revenue at $2,028 million to $2,068 million, implying a sequential growth of 1-3 percent.
- Earnings before interest and tax fell 13.3 percent quarter-on-quarter to Rs 2,097 crore in the three months ended September.
- EBIT margin contracted 260 basis points to 14.4 percent from 17 percent sequentially.
The margin narrowed despite a foreign exchange gain of Rs 121.7 crore during the quarter because of rupee depreciation compared with Rs 77.1 crore in the previous quarter. Dollar revenue contributes nearly 60 percent to its top line.
Wipro expects automation to drive margins, Chief Financial Officer Jatin Dalal said in a press statement. “Consistent improvement in our operating metrics reflects our relentless rigor of execution, which has resulted in our adjusted IT services margin reaching 18.1 percent in Q2.”
Chief Executive Officer Abidali Neemuchwala said the demand environment is robust for digital transformation and enterprise scale modernisation services.
The company, in a separate exchange filing, also announced the appointment of former State Bank of India Chairman Arundhati Bhattacharya as an independent director for five years starting Jan. 1.
Shares of Wipro ended 0.65 percent lower ahead of its earnings announcement compared with a 0.25 percent rise in the Nifty IT Index.