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By posting a flat net profit of ₹2,390 crore for the first quarter of 2020-21, Wipro Ltd surprised the street, which was expecting 8-10 drop in profits on a year-on-year basis due to the Covid-19 impact.
But the IT major remained circumspect about the growth recovery during the next quarter.
“On the projection front, I tend to be a little bit cautious. We are seeing places where there is some stability. We are not sure how it will pan out during the next quarter,” Wipro CFO Jatin Dalal told reporters on Tuesday.
He said the company will provide guidance “when the time is right to do so”. “We have done a lot of good work in looking at how to reduce the variable workforce and improve utilisation,” Dalal said.
Wipro’s Q1 revenue came in at ₹14,910 crore, which was 1.3 per cent higher than the same period last year. On a sequential basis, it fell 7.5 per cent.
Focus on profitable growth
The IT services’ segment revenue fell 5.7 per cent to $1.9 billion and the operating margin for the quarter was 19 per cent, up 0.6 per cent year-on-year. “We expanded the margins during the quarter, despite lower revenues, on the back of solid execution of several operational improvements and rupee depreciation. We also continued to sustain robust cash generation with operating cash flows at 174.9 per cent of net income,” Dalal said.
The newly-appointed CEO and MD, Thierry Delaporte, said the company will focus on profitable growth. “We will not do anything where we grow at any cost, though the priority will be to drive growth. Revenues without any associated margins will not happen,” he said.
Another top Wipro executive said the company will continue to hire and honour all the offers made. “But it will be staggered and delayed depending on the requirements of the business.”
Emkay Global, in a note to its investors, said while Wipro has avoided providing a formal revenue outlook, unlike TCS, it remains circumspect about a recovery in the near term.
Brazilian firm acquired
Wipro said it has signed an agreement to acquire Brazil-based IVIA Serviços de Informática Ltda. Founded in 1996, IVIA provides IT solutions, including system development, maintenance, consulting and project management services, to clients in different sectors such as financial services, transportation, retail, healthcare, consumer goods and manufacturing in Brazil.
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