March quarter: Wipro beats Street estimates

On a constant currency basis, the IT services segment revenues grew 3% q-o-q.

Wipro on Thursday beat analysts estimates on almost all the fronts in its January-March earnings. The company’s net profit during the period was up 0.2% sequentially at Rs 2,972.10 crore, higher than the Bloomberg consensus estimate of Rs 2,892.84 crore. Revenues at Rs 16,245.40 crore were up 3.7% sequentially as well as ahead of estimate of Rs 16,097.12 crore. The company’s Ebit during the quarter stood at Rs 3,417.10 crore, up 0.8% compared to the preceding quarter. Margin contracted 80 bps q-o-q at 20.92%. The contraction in margin was due to wage hikes.

The company has guided for revenues from its IT services business to be in the range of $2,195 million to $2,238 million for the June quarter, which translates to a sequential growth of 2% to 4%. However, this does not include revenue from its recently announced acquisitions of Capco and Ampion.

“We delivered a third consistent quarter of strong revenue growth, deal wins and operating margins. We also announced our largest-ever acquisition of Capco that will bolster global financial services sector. All key markets are now growing on a y-o-y basis and this provides us a solid foundation to build on next year growth rates,” Thierry Delaporte, CEO and managing director, said.

“We delivered a 340 bps expansion y-o-y in operating margins for the quarter after absorbing the impact of wage hike. On a full-year basis, we increased margins by 220 bps with a consistent improvement in operating metrics. Led by disciplined execution, we generated strong operating cash flows at 136.7% of our net income for the full year,” Jatin Dalal, chief financial officer, said.

On a constant currency basis, the IT services segment revenues grew 3% q-o-q.

Wipro’s attrition rate during the quarter stood at 12.1%, which was higher than 11% in the preceding quarter. “We will continue to hire more for the right skills. We are attacking the supply chain from all aspects. 80% employees got aggressive and differentiated salary hikes. There was 100% variable pay in Q2 and Q3 last year,” said Saurabh Govil, CHRO, Wipro. The company also mentioned salary hikes for the senior employees in the coming quarters.

Wipro said that it expects a strong demand environment owing to 12 large deals worth $1.4 billion. Cloud, digital experience and cybersecurity are expected to drive growth, it said. “We will continue to invest in cloud and hi tech,” Delaporte added.

Wipro said it added one client in over $100-million category, three in over $75-million band and two in the over $50-million category. The company added 52 customers during the quarter, taking the total active clients count to 1,120 at the end of March 2021, a drop from 1,136 clients in the preceding quarter.