Wipro Q2 Results: Profit Rises 3.15%, Margin Continues To Recover
The Bengaluru-based IT company has addressed supply-side constraints which had emerged following the coronavirus outbreak.
Wipro Ltd.’s quarterly profit rose in the quarter ended September as it addressed supply-side constraints that had emerged following the Covid-19 outbreak.
Net profit rose 3.15% over the previous quarter to Rs 2,465.7 crore in three months ended September, according to its exchange filing. Analysts’ estimates compiled by Bloomberg had pegged profit at Rs 2,477 crore. The software services company’s quarterly profit was hurt by a deferred tax impact of Rs 1,600 crore and a decline in other income.
Total revenue rose 1.17% sequentially to Rs 15,096.7 crore—higher than the estimated Rs 15,084 crore.
Revenue from IT services rose 3.66% to $1,992.4 million.
Operating profit rose 8% to Rs 2,780 crore.
IT services margin expanded to 19.2% from 19% earlier.
Wipro expects its IT services revenue to be between $2,022-$2,062 million in the next quarter. That translates to a 1.5%-3.5% growth, higher than the 0-2% growth.
Indian IT companies have seen their costs rise over the last two quarters as employees worked from home after the pandemic froze economic activity across the globe. Firms even lost billings as the outbreak hit even overseas clients that generate bulk of Indian IT’s revenue.
However, since then technology companies have fixed bottlenecks and resolved issues arising from remote working. That, coupled with the increasing growth of digital services, is helping IT firms skirt the impact.
This was the first full quarter of operations for Wipro under its new Chief Executive Officer Thierry Delaporte. The former Capgemini SE executive was brought in to usher growth at Wipro that has struggled to keep up pace with larger peers like Tata Consultancy Services Ltd. and Infosys Ltd.
“We had an excellent quarter with growth in revenues, expansion of margins and robust cash generation,” Delaporte was quoted as saying in a statement. “Our strategy is to focus on growth in prioritised sectors and markets led by vertical solution offerings.”
Much like Wipro, TCS reported a growth in profit and recovery in operating margins. TCS’ recovery underscores the increasingly optimistic sentiment for Indian IT among analysts and companies alike. While client spending on IT is estimated to fall 7.3% this year, the recovery is expected to be faster and smoother than the rest of the economy, according to Gartner.
“With the easing of lockdown restrictions, many enterprises will soon return to a higher level of revenue certainty allowing some cash flow restrictions to ease and CIOs to resume spending on IT again,” the industry tracker had said in its July update.
Wipro has also announced a Rs 9,500-crore buyback—it’s fourth in five years and the second by an Indian IT firm this fiscal.
Shares of Wipro closed 0.6% lower, ahead of the results, while the benchmark BSE Sensex ended trade largely flat. The stock rose 42.75% during the July-September period.
Updates to correct the name of Wipro's CEO.