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A buyback programme and a slowdown in the financial sector have pulled down the third-quarter net profit of the country’s third-largest IT services company, Wipro, by 3.8 per cent to ₹2,456 crore on a sequential basis.
The company’s CFO Jatin Dalal said the depletion of cash following the buyback programme and a slowdown in capital markets impacted the net profit. Revenues rose 2.3 per cent sequentially in Q3 FY20 to ₹15,470.5 crore while the operating margin grew 0.3 per cent to 18.4 per cent on a quarter-on-quarter basis.
Wipro also guided for the next quarter ending March 31, 2020. It expects revenues from its services business to be in the range of $2.09 billion to $2.13 billion ($2,095 million to $2,137 million).
This translates into a sequential growth of 0-2 per cent, with the upper end of the guidance slightly below Street estimates.
Wipro ended the day at ₹256 on the BSE, nearly flat compared with the previous day’s closing price.
On a year-on-year (YoY) basis, the net profit declined 2.2 per cent while revenues expanded 2.7 per cent for the same period. The IT services segment revenue was at $2.09 billion, a sequential growth of 2.2 per cent. EPS for the quarter was ₹4.3 per share, up 3.2 per cent YoY. Wipro has declared an interim dividend of ₹1 per share.
‘Secular growth’
“We have delivered a good quarter with secular growth across all business units, geographies and practices. We remain focussed on deepening our customer relationships, converting our funnel and winning large deals,” said Abidali Z Neemuchwala, MD and CEO.
Wipro’s revenues also received a boost with the acquisition of International TechneGroup Inc, a digital engineering company based out of the US, for $45 million last October.
Operating margin
“We expanded operating margins by 0.3 per cent, aided by a favourable movement in the currency.
“Further, we generated strong operating cash flows led by disciplined execution at 124 per cent of our net income,” said Wipro CFO Jatin Dalal.
Wipro also said its campus hiring has been doubled from the previous year.
On an annualised basis, attrition fell to 12.5 per cent in Q3 from 16 per cent in Q2, which a Wipro executive attributed to a higher number of fresh hires.