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India’s third largest IT services company Wipro has reported a 5.5 per cent growth in sequential and 6 per cent rise year-on-year in net profit to ₹2,189.50 crore for the September quarter because of increase in spending from BFSI clients.
The software services company also gave a guidance of $2.01-2.05 billion forecasting a growth of 0-2 per cent for the December quarter (Q3) revenue from IT services which was below street expectations. Wipro’s third quarter outlook has the seasonal impact of furloughs and higher leaves as the US and Europe enters holiday season, the company said.
The company’s consolidated revenues from operations for the second quarter on a q-o-q basis was ₹13,420 crore. On a quarter-on-quarter basis, the IT services segment grew 4 per cent to ₹2,280 crore for the September quarter. In dollar terms, the IT services’ revenue grew 2.1 per cent at $2.01 billion. Banking, Financial, Services and Insurance segment grew 27.6 per cent against 26.7 per cent on a sequential basis.
“We surpassed the milestone of $2 billion in quarterly revenues for IT services on the back of rigorous execution of our strategy,” said Abidali Z. Neemuchwala, Chief Executive Officer and Member of the Board.
He said the company will match industry growth rates this year which industry body Nasscom has said will be 7-8 per cent. “Our unique digital capabilities powered growth in top clients and position us well to drive our clients’ digital transformation.”
Digital revenues up Digital revenues in the quarter contributed 24.1 per cent of revenues, an increase from 17.9 per cent more than a year ago. While performance in energy and utilities dipped in the quarter due to slower growth from West Asia, the company has said that the business is stable as oil prices have largely remained even.
“While the IT services revenue growth was a slight miss with the third quarter guidance, the improvement in EBIT margin was a surprise,” said Urmil Shah, analyst with IDBI Capital.
In the second quarter, Wipro trained 12,000 employees on digital skills. “We now have more than 80,000 technical employees trained on digital pods. Also, Holmes, its automation product, has been used across 250 customers and generated productivity equivalent to 2,500 people,” said Neemuchwala.
In terms of geography, US posted a dip of 0.1 per cent, Europe registered a growth of 1.3 per cent and the APAC and Other Emerging Markets grew 3.4 per cent all on a constant currency basis quarter on quarter.
Client addition In terms of client addition, 41 clients were added, with 3 client additions happening in the $50million plus. In terms of operational efficiency, the gross utilisation was 72.9 per cent versus 72 per cent in the second quarter. In terms of attrition, the rate was 15.7 per cent versus 15.9 per cent in the first quarter.
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