Wipro Ltd.’s quarterly net profit missed analyst estimates in the quarter-ended March as it made provisions for an insolvent client and an impairment loss in one of its acquisitions.
Net profit of the country’s third-largest software services firm declined 6.6 percent to Rs 1,803 crore on a sequential basis, Wipro said in its filings with the stock exchanges. That’s less than the Rs 2,127 crore estimated by analysts tracked by Bloomberg.
The bottom line fell as Wipro recognised provisions totaling Rs 208 crore (or $32 million) – Rs 143.7 crore for the insolvent client and the rest for the impairment loss, the company said in a separate press release. The IT firm did not name the client or the acquisition. The company had made a Rs 317 crore provision in the December quarter for another insolvent customer.
Wipro had said, in an April 9 exchange filing, that it was expecting a decline of 65-75 basis points in its bottom line since one of its telecom operating client is undergoing insolvency proceedings. The IT firm, however, did not name the client. The company had made a Rs 317 crore provision in the December quarter for for a second insolvent customer.
Revenue of the Azim Premji-led conglomerate rose 0.7 percent sequentially to Rs 13,768.6 crore during January-march period. That compares with an estimate of Rs 13,924 crore.
Revenue in dollar terms from IT services rose 2.4 percent sequentially at $2.06 billion, in line with what the company had forecast. IT services revenue in constant currency terms remained flat at Rs 13,410 crore. The IT services margin for the quarter stood at 14.4 percent.
The company expects revenue from IT services to be in the range of $2.02-2.07 billion in the next quarter.
- Earnings before interest and tax fell 3.9 percent quarter-on-quarter to Rs 1,883 crore
- Operating margin contracted 60 basis points to 13.7 percent.
- The company had adjusted its margins to 17.2 percent during the quarter-ended December post the writeoff for its insolvent client.
Ahead of the earnings, Wipro shares extended their decline for the third day, its longest losing streak in a month. The stock closed 0.1 percent lower at Rs 286.70 apiece. The scrip rose 12.1 percent during the previous quarter, compared to 3.9 percent decline in the country’s Benchmark Nifty.
- The banking, financial services and insurance vertical’s revenue rose 3.3 percent to Rs 3,901.3 crore.
- Healthcare revenue rose 0.6 percent to Rs 1,857.5 crore.
- Energy, natural resources and utilities revenue rose 2.1 percent to Rs 1,676.8 crore.
- Communications revenue fell 6.7 percent to Rs 786.4 crore.
- Manufacturing and technology revenue rose 2.7 percent to Rs 3,087 crore.
- Consumer business unit remained flat Rs 2,102.9 crore.
Watch this interview with Jatin Dalal, chief financial officer of Wipro on this quarter’s earnings.