Higher expenses drag Wipro’s net down by 14%

PTI Bengaluru | Updated on October 24, 2018 Published on October 24, 2018

Company appoints former SBI chief Arundhati Bhattacharya in its board

Wipro saw nearly a 14 per cent drop in net profit to ₹1,885.7 crore during the second quarter this fiscal on a year-on-year basis. The decline in profits is following due to a revenue loss reported from one its clients but indicated that better performance in financial services’ segment and a good deal pipeline will drive growth for the fiscal. 

Wipro did not name the customer but the impact on client loss was ₹514 crore. Despite the client impact, Wipro improved its margins from 15.6 to 18.1 per cent — a 90 (0.9 per cent) basis points improvement because of strong deal wins during the quarter. 

Sanjeev Hota, AVP Research at Sharekhan by BNP Paribas, said that the IT major reported better-than-expected constant currency growth and EBIT margin on adjusted basis (excluding the loss incurred from settlement with the customer were on expected lines).

Wipro also gave a revenue guidance from IT services business to be in the range of $2.028- billion to $2.06 billion translating into a sequential growth of 1-3 per cent. 

Abidali Z Neemuchwala, CEO and member of the board, said in the healthcare sector, it continues to see challenges due to the uncertainty from Affordable Care Act in the US.

On a year-on-year basis, revenues grew 8.3 per cent to ₹14,541 crore. On a sequential basis, IT services revenue rose 6.2 per cent. In the quarter, Wipro divested its hosted data centre business. 

The outlook given by Wipro does not include the comparable revenue from its India’s government business. Neemuchwala said that Wipro, as a part of its India business reorganiszation, is carving out the PSU and India government business as they are re-focusing on business coming from areas such as IoT and smart cities in India.

In the quarter, digital revenues went up by 13.4 per cent and now contributes to 31.4 per cent of its business. The company Its added a new client in the $100-million category and seven new clients in the $10-million segment. 

Jatin Dalal, Chief Financial Officer said that utilisation was in excess of 85 per cent, coupled with increasing automation helped in margin improvement.

Wipro also announced the appointment of former SBI Chairman Arundhati Bhattacharya to its Board. 

Published on October 24, 2018
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