Wipro Q2 Results: Revenue At Upper End Of Guidance, Margin Under Pressure

Wipro Ltd.'s revenue rose in the second quarter driven by software services even as margins came under pressure.

Revenue rose 7.7% sequentially to Rs 19,668.9 crore in the quarter ended September, according to the Bengaluru-based company's exchange filing. Analysts' estimates compiled by Bloomberg pegged the metric at Rs 19,385.20 crore. The metric grew in double digits sequentially in the first quarter.

Revenue from IT services jumped 6.9% to $2,580 million and 8.1% in constant currency terms.

Wipro had guided for revenue from its IT services business at $2,535-2,583 million in the quarter ended September. That’s a 5-7% sequential growth.

The company has now guided for revenue of $2,631-2,683 million for the December quarter. That's a 2-4% sequential growth projection over September quarter.

"The company saw organic revenue growth of 4.1% in Q1 and 4.6% in Q2," Jatin Dalal, Wipro's president and chief financial officer, told BloombergQuint in an interview. The guidance provided, he said, is normalised after the company's integration with Capco.

Highlights (QoQ)

• Net profit fell 9.5% to Rs 2,930.6 crore, compared with the Rs 2,868.8-crore consensus estimate.

• Ebit up 2% to Rs 3,491 crore.

• Margin contracted 104 basis points to 17.4% from 18.8% in Q1.

• Twelve-month trailing attrition rate rose to 20.5%

Attrition will be challenge but the company has been investing in talent, Dalal said, adding Wipro has given three wage hikes in the last nine months.

The company sees margins in the range of 17-17.5% in the medium term, he said, adding it can jump towards 18% in between quarters.

IT Services Revenue

Revenue from IT services segment grew 6.9% sequentially to $2,580 million. The company added large deals worth $3 billion during the quarter, said Thierry Delaporte, managing director and chief executive officer of Wipro.

Segmental Revenue

Shares of Wipro rose 2% on Wednesday compared with the S&P BSE Sensex's 0.8% increase.