Wipro Q1 Results: Revenue Grows At Fastest Pace In 38 Quarters
Wipro Ltd. beat its own revenue growth guidance for the first quarter, aided by investments towards digital services as businesses continued to move online during the Covid-19 pandemic.
Revenue of the software services provider increased 12.4% sequentially to Rs 18,252.4 crore in the quarter ended June, according to its exchange filing. That compares with the Rs 17,563.3-crore consensus estimate of analysts tracked by Bloomberg.
For the April-June quarter, Wipro had expected 2-4% revenue growth, excluding new acquisitions — Capco and Ampion.
Wipro Q1 Highlights (Quarter-On-Quarter)
Net profit rose 8.7% to Rs 3,232.10 crore, compared with the Rs 2,811.70-crore consensus estimate.
Revenue from IT services jumped 12.2% to $2,414.5 million; and 12% in constant currency terms.
Operating profit rose 1.6% to Rs 3472 crore.
Margin contracted 170 basis points to 18.8%.
According to Jatin Dalal, chief financial officer at Wipro, of the first quarter sequential growth of 12%, organic growth comprises 4.9% and the rest by Capco.
Wipro expects revenue from its IT services business to be at $2,535-2,583 million in the quarter ending September. That’s a 5-7% sequential growth.
“We expected full-year revenue to grow at well over double digits even excluding for Capco contribution,” Thierry Delaporte, managing director and chief executive officer at Wipro, said.
To be sure, the company had projected FY22 revenue growth at 11-13% after the fourth quarter, assuming contribution from Capco and Ampion acquisitions.
India’s software services providers had lost billings — as they generate most of their business overseas — and saw their costs rise after trade stalled when the pandemic struck last year. But since then, large deal wins and higher client spending on cloud computing and artificial intelligence have helped them recover.
Wipro reported a total contract value of $715 million during the reported quarter. The company added eight clients, of which two were in the $100-million band.
Wage hike and other discretionary spends narrowed Wipro’s margin as well during the first quarter.
Rivals Tata Consultancy Services Ltd. and Infosys Ltd., too, have seen their margin contract due to salary hikes. Their revenue, however, increased on account of large deal wins and digital transformation.
Wipro’s revenue from all key verticals, barring manufacturing, rose over the preceding quarter. Banking, financial services and insurance; consumer and energy were among the growth drivers.
Shares of Wipro closed 2.96% higher before the results were announced, compared with a 0.44% rise in the benchmark Nifty 50.