Wipro Q3 Results: Revenue At Higher End Of Guidance, Margins Surprise
Wipro expects its IT services revenue to increase to $2,102-$2,143 million in the quarter ending March 2021.
Wipro Ltd.’s quarterly revenue rose, aided by a ramp-up in spending on technology as uncertainties stemming from the Covid-19 pandemic waned.
The software services exporter reported a 3.68% sequential increase in revenue at Rs 15,670 crore in the quarter ended December, according to an exchange filing. That compares with the Rs 15,492.70-crore consensus estimate of analysts tracked by Bloomberg. In constant currency terms revenue rose 3.4%.
Revenue from IT services also met Wipro’s guidance of 1.5%-3.5% growth during the third quarter.
Other Highlights (quarter-on-quarter)
- Net profit increased 20.32% to Rs 2,966.7 crore, against the estimated Rs 2,551.80 crore.
- Revenue from IT services stood at $2,071 million compared with $1,992.4 million.
- IT services margin expanded to 21.65% from 19.2%.
- Operating income rose 17.12% to Rs 3,320.40 crore.
Wipro now expects its IT services revenue to increase to $2,102-$2,143 million in the quarter ending March 2021, indicating 1.5-3.5% growth over the preceding three months.
If Wipro meets the upper end of the guidance, it will post total revenue worth $8,128 million for the entire fiscal, still 1.6% lower than FY20.
Technology companies saw their costs rise after the Covid-19 pandemic stalled trade and forced employees to work from work. The firms even lost billings as they generate most of their business overseas. The sector, however, rebounded in the second quarter, aided by large deal wins and client spending on cloud computing, artificial intelligence and internet of things as businesses moved online.
“Wipro has truly surprised the street with its aggression, sharpening focus on large deals and focussed sales,” Prabhudas Lilladher said in its December note. “Under the new CEO, Wipro has made a solid beginning and we believe that the gap in growth rate will reduce when compared to peers.”
Wipro in December had signed a $700-million takeover deal with Metro AG that will see more than 1,300 staff of the German wholesaler move to the Indian firm. The IT company in the same month also announced up to Rs 9,500-crore buyback programme, which closed on Jan. 11, 2021. The last date for settlement of bids on the stock exchange would be on or before Jan. 20, 2021.
Wipro’s peer Tata Consultancy Services Ltd., too, saw an increase in revenue and profit during the three months ended December.
Shares of Wipro closed 0.23% higher before the results were announced, compared with the benchmark Nifty 50 Index that remained largely unchanged.