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Wipro has posted a 7 per cent increase in net profit to ₹2,241 crore for the third quarter, beating street expectations, on the back of growing digital business and higher IT spend by clients.
The country’s third largest IT services company, which announced results for the July-September quarter, said revenues too increased 7 per cent to ₹12,500 crore.
IT Services revenues grew 2.1 per cent to $1,831.9 million on a sequential basis, while margins came in at 20.7 per cent as against 21 per cent during the previous quarter.
On a year-on-year basis, IT services grew 10 per cent, while profit for the IT services segment rose 4 per cent to $381 million. But CFO Jatin Dalal said the company is focussed on growth. The real dampener was the IT services revenue guidance for the next quarter ending December. The company forecast a guidance in the range of $1,841 million to $1,878 million. Analysts expected a rise of 2-4 per cent, while the guidance was actually in the range of 0.5-2.5 per cent.
TK Kurien, CEO, told reporters that the lower guidance was largely because of the forthcoming holiday season in Europe and the US as well as lower deal closures ahead. He also said the number of multi-$100 million deals had come down.
Major concerns Kurien pointed out that deal sizes were getting smaller and multi-billion dollar deals had reduced, while there was pressure on pricing with respect to new deals.
Kurien also voiced concerns amongst clients in banking, retail and manufacturing industries, which are expected to see cutbacks.
On the operating matrix, the company had net utilisation levels of 77.2 per cent compared to 79.4 per cent on a sequential basis. On EBITDA, the margin was at 21.7 per cent compared to 21.3 per cent, while the EBIT margin was at 19 per cent compared to 18.7 per cent.
Wipro added one client in the $50 million space and three in $10 million. The quarter also saw Business Process Services and analytics grow 7.1 and 3.3 per cent on a sequential basis.
The company added 6,607 employees, taking the total headcount to 1,68,396. The attrition rate was flat at 16.8 per cent compared to 16.4 per cent during the previous quarter.
Dalal said the company’s investments in next-gen delivery practices generated productivity to significantly mitigate the impact of wage hikes and utilisation on operating margins. “The impact of cross-currency on operating margins was compensated by the benefits from rupee depreciation.”
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