Wipro net drops 12 pc, fails to meet market expectations
IT services major Wipro registered a near 12 percent sequential decline in consolidated net profit to Rs 1,930 crore for the third quarter on higher costs, missing market expectations.
Revenue from IT services rose marginally to Rs 13,235 crore during the December quarter.
Wipro said it expected revenue from the IT services business to be in the range of $2.03 billion-$2.07 billion in the quarter ending March.
Wipro CEO Abidali Z Neemuchwala said, “The company's share in digital is growing and is about 25 percent of the total revenues. The company is also leading in the BFSI and healthcare segments.”
The company said its IT services margins stood at 14.8 percent, impacted by a provision of Rs 3.17 billion ($49.7 million) made with respect to the insolvency of a customer post the balance sheet date. Adjusted for this event, the margin was higher at 17.2 percent.
Jatin Dalal, Chief Financial Officer said - “We have made strong progress in our client mining with the number of clients contributing revenues over $50 million increasing from 33 to 41 in the last one year.”
Sarabjit Kour Nangra, VP Research - IT, Angel Broking, says, "Overall, the current quarter numbers were below expectations. Going forward into the next quarter, the company has given a guidance, which is higher and is in line with its earlier commentary that they expect a gradual improvement in the next quarter.”
She says client additions have been healthy, with good additions in the high sales ticket sizes also. While Wipro has been improving its operating performance, its top-line growth has been muted. Thus, as we move into the next financial year, for Wipro it is imperative it grows its sales, along with improving its operating leverage. As of now, on back of the valuations, Angel Broking maintains a reduce rating on the stock, with a price target of Rs 289. Today, shares of Wipro ended at Rs 328.80 on the National Stock Exchange.
