Wipro Q2 net up 1%, says facing multiple headwinds

In rupee terms, Wipro’s IT services revenue was Rs 13,140 crore, which was a sequential fall of 3.3 per cent, while net profit stood at Rs 2,070 crore, a rise of 1 per cent.

By: ENS Economic Bureau | Bengaluru | Published:October 22, 2016 2:29 am
Wipro, Wipro Q2 results, Wipro results, Wipro Q2 profit, Wipro profits, Wipro performance, Wipro quarter profits According to Wipro, the company faced multiple headwinds including a general hesitancy on the part of the clients to spend more on technology services. (Source: File)

Mirroring the subdued mood currently prevalent in the Indian IT industry, Wipro too posted flat revenue growth for the three months to September with net profit rising marginally due to cost optimisation measures and higher utilisation of its employees.

In rupee terms, Wipro’s IT services revenue was Rs 13,140 crore, which was a sequential fall of 3.3 per cent, while net profit stood at Rs 2,070 crore, a rise of 1 per cent.

Net profit, in dollar terms, rose 2.6 per cent sequentially and the expectation for the December quarter is also
muted, with the IT major providing a revenue growth guidance of 0-2 per cent.

Wipro’s IT services segment reported a revenue of $1.91 billion for the second quarter, which was a sequential
decrease of 0.8 per cent, missing expectations.

Net profit during this period was $312 million compared with $304 million in the first quarter.

Tata Consultancy Services (TCS) had also posted flattish revenue growth during the quarter while Infosys recorded a
3.5 per cent sequential growth in revenue though it slashed its revenue growth guidance to single digits for the
fiscal.

According to Wipro, the company faced multiple headwinds including a general hesitancy on the part of the clients to spend more on technology services. CEO Abidali Neemuchwala said, “We see cautious optimism for the next two to three quarters as certain headwinds like Brexit and US presidential elections have increased the level of uncertainty.”

The Wipro CEO expects that there would be better clarity in the new calendar year and there could be an uptick in the investments on technology services.

Operating profit margins remained flat at 17.8 per cent. Chief financial officer Jatin Dalal said, “IT services
segment margins was maintained at 17.8 per cent as headwinds in salary increases were offset by strong operational
improvements in automation led productivity, offshoring and utilisation improvement.”

During the second quarter, every business vertical recorded a sequential decline in growth except for the healthcare segment. Wipro attributed this to certain seasonality and cross-currency impact, though CEO remarked that in constant currency terms they were within their guided range.