CHENNAI: India’s third largest IT services player, Wipro, reported a 7.6 per cent year-on-year drop in net profit for the quarter ended September 31, posting a consolidated net profit of Rs 2,070.4 crore against Rs 2,241 crore during the same period last year.
The take away, however, is not the fall in profit, but the firm’s continued sluggishness in revenue growth.
According to the balance sheet filed by WIpro with the stock exchanges and the company’s own statement, its revenue growth has been as muted as TCS’ on a sequential basis. IT Services Segment Revenue in dollar terms was $1,916.3 million, a sequential decrease of 0.8% and a year-on-year increase of 4.6%.
Wipro also gave a guarded revenue guidance for the next quarter, stating that it expects “revenue from our (Wipro’s) IT Services business to be in the range of $ 1,916 million to $ 1,955 million.” — a revenue guidance of 0 - 1 per cent. IT Services Segment revenue in Non-GAAP constant currency dollar terms too were unimpressive, growing mildly by 0.9% sequentially and 7.2% y-o-y.
The result comes in the wake of other IT heavy weights — TCS and Infosys, making their own contributions to the sector’s misery. TCS’ sequential revenue growth was a paltry 1 per cent, while Infosys cut revenue forecasts for FY17 for the second time in three months.
“We delivered revenues in constant currency at the top end of our guidance range”, said Abidali Z Neemuchwala, Chief Executive Officer and Member of the Board, adding, “I am very excited about Wipro’s acquisition of Appirio, a leader in cloud applications especially across Salesforce and Workday implementation services. This acquisition will establish Wipro’s dominance in cloud application services and further strengthen Wipro’s brand as a Digital Partner of choice.”
“We maintained margins in Q2 despite the impact of salary increase for an incremental two months due to strong operational improvements in automation-led productivity, offshoring and utilization.” pointed out Jatin Dalal, CFO. “As we look forward, the demand environment is mixed in a seasonally weak quarter affected by furloughs and lower number of working days.” According to the company, total income from operations stood at Rs 13,896.8 crore, a 10.5 per cent jump from Rs 12,566.8 crore last year.
In rupee terms, IT Services Segment Revenue was Rs 13,140 crore ($2.0 billion), up 9 per cent, y-o-y, while segment profits stood at Rs 2,340 crore ($352 million).