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Informist, Friday, Jul 19, 2024

 

--Wipro Apr-Jun consol net profit 30.03 bln rupees 

--Analysts saw Wipro Apr-Jun consol net profit 29.63 bln rupees 

--Wipro Apr-Jun consol revenue 219.64 bln rupees 

--Wipro Apr-Jun consol PAT 30.03 bln rupees vs 28.35 bln qtr ago 

--Wipro Apr-Jun consol revenue 219.64 bln rupees vs 222.08 bln qtr ago 

--Wipro: Apr-Jun IT svcs revenue dn 1% QoQ in constant currency terms 

--Wipro: See IT services Jul-Sep revenue growth -1% to 1% QoQ 

--Wipro: Total headcount 234,391 as of Jun 30 vs 234,054 qtr ago 

--Wipro: Apr-Jun 12-month attrition at 14.1%, vs 14.2% in Jan-Mar 

--Wipro: Apr-Jun employee utilisation 87.7% vs 86.9% qtr ago 

--Wipro: Won deals worth $3.3 bln in Apr-Jun vs $3.6 bln qtr ago 

--Wipro: Apr-Jun IT services operating margin 16.5%, up 10 bps QoQ 

--Wipro: Apr-Jun operating cash flow 40 bln rupees 

--Wipro: Apr-Jun operating cash flow 131.6% of net income 

--Wipro: Won large deals worth $1.15 bln in Apr-Jun 

--Wipro: Discretionary spending continued to be muted in Apr-Jun 

--Wipro: Didn't see significant shift in demand environment in Apr-Jun 

--Wipro: Maintained positive momentum in CAPCO business 

--Wipro: Driving large deal creation across client base 

--Wipro: Large deal pipeline remains robust 

--Wipro: Ramped up upskilling across emerging, core tech areas 

--Wipro: In better position compared to Apr-Jun 

--Wipro: To sustain margin in narrow band, with upward bias in Jul-Sep 

--Wipro: Seeing renewed momentum in Americas 

--Wipro: Hope to complete backlog of job offers in FY25 

--Wipro: Payouts will be in line with business performance 

--Wipro: Expect macroeconomic environment to be better in Oct-Mar 

--Wipro: Confident of returning to growth in Americas in medium term

--Wipro: To hire 10,000-12,000 freshers in FY25 

--Wipro: Positive on BFSI demand in Jul-Sep 

 

By Darshan Nakhwa 

 

MUMBAI – Wipro Ltd today reported better-than-expected consolidated net profit and operating margin for the June quarter, on the back of deal wins of $3.3 bln, better utilisation, and cost optimisation. The company's bottomline rose nearly 6% on quarter to 30.03 bln rupees, and its operating margin expanded by 10 basis points to 16.5% over the same period. Analysts had estimated the company's net profit at 29.63 bln rupees and operating margin at 16.3%.

 

The Bengaluru-based company reported slight growth in two metrics even as its consolidated revenue fell 1.1% on quarter to 219.64 bln rupees, missing analysts' estimate of 222.09 bln rupees. Its IT services revenue declined 1.2% sequentially to $2.63 bln.

 

In a press conference post-earnings, Wipro's Chief Executive Officer and Managing Director Srini Pallia said, "In Q1, we did not see a significant shift in the demand environment. Clients remained cautious and discretionary spending continued to be muted."

 

Wipro won $3.3 bln deals in the June quarter, compared to deals worth $3.6 bln in Jan-Mar. It won 10 large deals worth $1.15 bln during the quarter. However, the company's large deal bookings were 3.1% lower than Jan-Mar.

  

"We are driving large deal creation systematically across our client base. We are shaping these opportunities proactively. As a result, our pipeline for large deals remains robust. Once again, we had a quarter where our large deal bookings exceeded $1 bln. Our success in securing 10 large deals in Apr-Jun was the key factor that made this possible," said Pallia.

 

ACROSS GEOGRAPHIES, BUSINESSES

The company's largest client segment of banking, financial services, and insurance contributed over 34% to the company's revenue in Apr-Jun, followed by the consumer business contributing 19.2%. The revenue from BFSI rose 0.5% on quarter in constant currency terms, and that from consumer segment grew 1.6%.

 

Banking and financial services retained its positive momentum from Jan-Mar, and the demand from the segment is expected to be positive in Jul-Sep, Pallia said. In Apr-Jun, the company's Capco business also maintained positive momentum, achieving a sequential growth of 3.4%. Capco is a global management and technology consultancy dedicated to the financial services and energy industries.

 

Revenue from other verticals like manufacturing and communications, energy, natural resources and utilities, and health declined 0.5%-6.3% sequentially in constant currency terms.

 

In Apr-Jun, the company saw renewed momentum in Latin America and US, and it is confident of returning to growth in the medium-term, said Pallia. However, there was softness in demand from Europe, Australia, New Zealand, India, West Asia, South-East Asia, Japan and Africa.

 

The company's total expenses in the June quarter were 186.67 bln rupees, down 1.6% on quarter. Employee benefit cost, which is the biggest expense incurred by the company, fell 2.9% over the previous quarter to 132.29 bln rupees. However, expense related to sub-contracting and technical fees rose 1.9% on quarter to 24.77 bln rupees.

 

In the June quarter, Wipro generated operating cash flows of 40 bln rupees, which formed nearly 131.6% of its net income for the quarter.

 

HEADCOUNT

On the talent front, Wipro's total employee headcount rose to 234,391 as of Jun 30 from 234,054 a quarter ago. The voluntary attrition rate in the trailing 12 months was 14.1% in Apr-Jun, compared to 14.2% in the previous quarter.

 

On recruitment, Pallia said, "Our goal is to attract, nurture and grow a diverse talent pool. We have ramped up our up skilling efforts across various practices covering both emerging and core technology areas."

 

In 2024-25, Wipro plans to hire 10,000-12,000 freshers, and would also complete its backlog of offers made in this fiscal year.

 

In Apr-Jun, Wipro's employee net utilisation level increased by 80 basis points sequentially to 87.7% from 86.9% in Jan-Mar. "We are building muscle so that we are there ready as growth comes back. We have seen utilisation going up every quarter. It's reached a peak and we believe this is the right time for us to look at the supply side so that we can have a much better position," said Saurabh Govil, chief human resources officer of Wipro.

 

Responding to a question on variable pay, Govil said, variable payout follows the business performance, and will be better than last quarter.

 

Today, shares of Wipro ended 2.8% lower at 557.20 rupees on the National Stock Exchange.  End

 

Edited by Ashish Shirke

 

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