Wipro’s revenue from IT services saw a sequential growth of 2.1 per cent in the September quarter, almost in line with the market estimate of 2.3-2.5 per cent.
The company announced acquisition of 67 new clients, with one client in the $50 million-plus bucket, but weakness persisted in the energy vertical.
Wipro derives about 15 per cent of its revenue from the energy and utilities vertical, which is much higher than its peers in the Indian IT services space.
The deal win in the recent quarter from an oil company, for application maintenance services, does not guarantee the sector’s improved health. Oil prices are down from about $115 a barrel in 2014 to under $50 now, and companies are finding it tough to cover costs.
Even big names in the industry, such as Shell and Chevron Corp, have resorted to cutting on capex, laying off people, and pruning their budget even on operational expenses.
In the September quarter, Wipro saw its energy vertical’s revenue grow 0.3 per cent sequentially and drop 2.9 per cent year-on-year.
Losing out in Europe Going by geography, the company has lost to peers Infosys and TCS in Europe. The recovery in the manufacturing sector in Europe has been losing steam since a few months, with fresh worries of a China-led slowdown.
There has also been immense competition for new orders that come up.
In constant currency terms, while Infosys saw Europe record an 8 per cent growth in revenue sequentially and TCS by about 3 per cent, Wipro recorded only a 1.4 per cent growth.
However, what helped was the 5.1 per cent sequential growth in Asia Pacific and other emerging markets.
While it did well in 2014-15, this market had recorded a muted 0.4 per cent growth in the June quarter.
While both TCS and Infosys showed improvement in margins, Wipro saw margins contract in the quarter. It recorded operating profit margins at 20.7 per cent, versus 21 per cent in the June quarter.
Despite improving utilisation to 82.3 per cent from 81.9 per cent in the June quarter, the margin contraction points towards pressure from competition.