Rishad Premji, 42, who took over as the new executive chairman of Wipro Ltd on Wednesday, has quite a task on hand to steer the company to some healthy numbers over the next few years.

The transfer of the baton was quite low-key but his father, Azim Premji as the non-executive director and as founder-chairman, will be around to help Rishad navigate through the initial period.

Rishad Premji ‘s elevation was welcomed by the street with the stock price up 2 per cent to end the day at ₹270.5 on the BSE.

Rishad Premji has been well-groomed over the years to take over the mantle. He joined the company as a business manager in 2007 and in 2015, he was inducted into the board. A graduate from Harvard Business School, Premji has handled treasury and investor relations giving him exposure to consulting, finance, treasury and operations. He became the company’s chief strategy officer in 2010 reporting to the CEO and headed the $100-million venture fund.

Before joining Wipro, Rishad Premji worked with Bain & Company in London and with GE Capital in the US. He was recognised as a Young Global Leader by the World Economic Forum for his outstanding leadership, professional accomplishments, and commitment to society in 2014. Along with Premji, Abidali Neemuchwala has also taken over as the new managing director of the IT major.

Analysts haven’t responded well to the previous quarter numbers of Wipro with margins sliding for the IT services for the second straight quarter. The operating margin has fallen to 16.6 per cent. Net profit decreased by 3.9 per cent to ₹2,328 crore for the first quarter this fiscal on a sequential basis while revenues fell 2.4 per cent to ₹14,786 crore for the same period.

HDFC Securities in its note to the investors said Wipro is struggling to grow (plus 2.9 per cent YoY in FY’19) whereas larger peers are clocking double-digit growth rate. BFSI, which was the key revenue driver for Wipro is witnessing slowdown. Issues such as completion of large projects (consumer), delay in decision making (BFSI, manufacturing) and deferral in the ramp-up of large projects are impacting growth.

“The soft guidance for 2QFY20 indicates that the lag is entrenched. Margin expansion is difficult and the buyback trade is over. Wipro has underperformed in last three months ( minus 8 per cent vs NIFTY IT minus 3 per cent) and the trend will continue unless growth revives,” the note said.

Digital drive

Prabhudas Liladhar in its note to the investors said the company should try to reduce focus to fewer verticals and eliminate the ones where it has lost scale and edge. It said IT companies will have to invest in digital and people to participate in a strong demand environment. “Wipro’s management aggressive cost rationalisation keeps us sceptical about their participation in the demand environment and hence will restrict their revenue momentum.”

Published on August 1, 2019