Wipro Quarterly Results: Net Profit Up 9%
IT services giant Wipro reported their first-quarter results of FY 22. The company beat its own growth guidance and revenue estimates pushed by investments in the digital sector as scores of businesses leveraging the online space during the pandemic.
Wipro’s net profit rose 9% sequentially to Rs 3,242.6 crore in the June quarter. The company also reported a 12.4% sequential increase in its revenue q-o-q. Wipro expected a 2-4% revenue growth in this quarter and beat its own estimates by a comfortable margin.
Wipro stock closed 0.16% up at 576.85 on Friday, July 16.
Hits
- Gross revenue for the IT giant grew 12.4% q-o-q and 22% y-o-y to Rs 18,252.4 crore.
- The company’s consolidated net profit grew by 9% from 2,972.3 crores to Rs 3,242.6 crore over the last quarter.
- On a y-o-y basis, net profit grew 35.7%, far ahead of market expectations of 14-19% y-o-y growth.
- The company’s IT services revenue grew by 12.2% to $2,414.5 million q-o-q and by 25.7% y-o-y.
- The company reported operating cash flow for the quarter at $451.1 mn, amounting to 103.7% of net income.
- The IT firm’s earnings per share (EPS) increased from Rs 5.39 to Rs 5.92 over the last quarter.
Misses
- Wipro’s operating margin decreased by 29 base points to 18.8% y-o-y.
- The company’s attrition rate remains a concern and jumped to 15.5% from 12.1% over the last quarter. The company expects nearly the same figures in the upcoming quarters as well.
Segment-wise revenue
Banking, Financial Services & Insurance: 33.4%
Consumer: 17.3%
Energy, Natural Resources and Utilities: 13.1%
Technology: 12.2%
Health: 11.9%
Manufacturing: 7%
Communication: 5.1%
Company Statement
Wipro’s CFO Jatin Dalal says the Bengaluru-based firm expects its revenue from its IT business to be in the range of $2,535 million to $2,583 million in the next quarter. This translates to a 5-7% expected sequential growth in the second quarter of this financial year. Wipro’s CEO and MD Thierry Delaporte lauded the company’s performance in the face of the challenges presented by the pandemic. Delaporte also spoke of Wipro’s Capco collaboration and hailed how the company exceeded its guided range.
The company added over 12,150 employees in the quarter and paid salary hikes to retain talent with them.
Wipro in News
The company closed 8 large deals worth $715 million. Wipro also issued its first-ever bond offering in the international markets to the tune of $750 million.
Wipro signed a deal to acquire Ampion on April 1, 2021, which was slated to close by the end of the recently concluded quarter. The company is still waiting on obligatory approvals.
The company also entered into an agreement with a European multinational pharmaceutical company, a US-based oil field services company, and a leading US-based communication services provider among a slew of other projects this quarter.
The IT services major is looking to hire 33% more freshers in this financial year.
What This Means For The Investor
The company reporting its highest-ever organic sequential growth in 38 quarters has investors excited. Apart from the company’s reported growth, Wipro’s revenue growth in constant currency terms too was well above the market expectations.
Analysts feel that Wipro’s Capco and Ampion deals can drive the company’s growth. However, the growing attrition rate remains a concern.