Wipro Q3 Results: Profit Falls Even As IT Margin Rebounds
Wipro’s net profit fell 3.8% sequentially to Rs 2,456 crore on the back of revenue that rose 2.3% to Rs 15,470.50 crore.
Wipro Ltd.’s quarterly profit declined despite arresting a three-quarter fall of margin in its IT services business.
Net profit of the Bengaluru-headquartered software services firm fell 3.8 percent sequentially to Rs 2,456 crore in the quarter ended December, it said in an exchange filing. That was in line with Rs 2,451-crore estimate by analysts tracked by Bloomberg.
- Revenue rose 2.3 percent quarter-on-quarter to Rs 15,470.5 crore; analysts had forecast Rs 15,434 crore.
- Operating profit increased 1.4 percent to Rs 2,650.7 crore.
- Operating margin declined 20 basis points to 17.1 percent.
- IT services’ margin expanded 30 basis points to Rs 18.4 percent.
The firm’s revenue received a boost as it completed the acquisition of International TechneGroup Inc., a U.S.-based digital engineering company, in October 2019 for $45 million. Wipro forecast its third-quarter IT services revenue at $2,065-$2,108 million, implying a sequential growth of 0.8-2.8 percent.
The company now expects revenue to grow in the range of $2,095 million to $2,137 million—a 0-2 percent sequential growth for the January-March quarter.
The cash balance falling on the back of the completion of a buyback programme in September affected interest earned and other income which in turn, has “slightly” pulled down profit figures—both sequentially and year-on-year, Jatin Dalal, the company’s chief financial officer, said at a post-earnings press conference.
Going forward, Wipro will invest in new technologies to suit customer needs as growth trajectory remains the top priority over maintaining margin, Dalal told BloombergQuint in an interview.
We saw a growth slowdown in financial services due to the continued softness in capital markets and banking environment. We, however, remain confident that the banking sector will come back and we have got a very good deal pipeline (in the sector). And I see no customer-specific or company-specific issues in the fourth quarter.Abidali Z Neemuchwala, Chief Executive Officer and Managing Director, Wipro
A weaker rupee and cross-currency hedges helped the company widen margins by nearly 30 basis points in its IT services business, Neemuchwala said. The Indian currency depreciated nearly 0.42 percent against the greenback in the three months ended December.
Watch | Interview with Wipro management here:
The software exporter announced an interim dividend of Re 1 per equity share and record date was fixed as Jan. 27.
Shares of Wipro closed 0.47 percent higher compared with a 0.3 percent advance in the NSE Nifty IT Index ahead of the earnings announcement.
