Wipro Ltd on Thursday posted a net profit of ₹2,972.3 crore, a nearly 28% increase from the year-ago period, on the back of higher revenues. The profit was above consensus Bloomberg estimates of ₹2,873.7 crore.
The Bengaluru-based company’s revenues for the fourth quarter grew 3.4% year-on-year (y-o-y) to ₹16,245.4 crore on broad-based growth across sectors. The dollar revenue for the IT services segment grew 3.8% annually to $2.15 billion, driven by strong volume growth, making it the best fourth quarter in a decade.
Wipro expects revenue from its flagship IT services business for the June quarter to grow 2-4% in the range of $2.19 billion to $2.23 billion, backed by a strong demand environment and robust pipeline of digital deals. This does not include revenue from the acquisitions of Capco and Ampion. The revenue growth guidance is higher than analyst estimates of 0.5-2.5%. Unlike Infosys Ltd, which provides guidance for the full year, Wipro guides for the quarter ahead.
“We delivered a third consistent quarter of strong revenue growth, deal wins, and operating margins. We also announced our largest ever acquisition of Capco, which will bolster our global financial services sector. We are excited by this wave of business momentum that we are witnessing. All key markets are now growing on a y-o-y basis and this provides us a solid foundation to build on next year growth rates,” said Thierry Delaporte, chief executive officer and managing director, Wipro.
Operating margin for the IT services segment stood at 21% for the fourth quarter, an expansion of 344 basis points y-o-y after absorbing the impact of wage hikes doled out in January. The next wage hike will be for senior employees and will be given in June.
Effective 1 January, Wipro reorganized its operating model into four strategic market units (SMUs), three of which, Americas 1, Americas 2, and Europe grew 3.5%, 4%, and 3.7% sequentially. However, Asia Pacific Middle East Africa (APMEA) declined 6.3% quarter-on-quarter in constant currency terms. While Americas 1 and Americas 2 are primarily organized by industry sector, Europe and APMEA are organized by countries.
The two global business lines, iDEAS (Integrated Digital, Engineering & Application Services) and iCORE (Cloud Infrastructure, Digital Operations, Risk & Enterprise Cyber Security Services) accounted for 56.8% and 43.2% respectively to the company’s revenues.
“Strong guidance, positive y-o-y growth in key markets and strong deal wins are expected to reduce the gap in growth rate with large peers in FY22, which would provide scope for re-rating. We have Buy rating on Wipro,” said Sanjeev Hota, head of research, Sharekhan by BNP Paribas.
The voluntary attrition for Q4 on a trailing 12-month basis increased to 12.1% from 11% in the previous quarter reflecting the industry-wide trend of increased demand for talent. To contain the rising attrition levels, the company is on track to providing both financial and soft perks to the employees, said Saurabh Govil, chief human resources officer, Wipro.
During the fourth quarter, Wipro also completed the buyback of 237.5 million equity shares at ₹400 per equity share for an aggregate amount of $1.3 billion, excluding buyback tax.
Wipro announced its earnings after market hours. Ahead of its earnings announcement, Wipro shares were up 2.95% to close at ₹431 on the BSE.