Wipro reports 12% rise in Q1 net profit but gives weak revenue outlook

Wipro Ltd, one of the leading Indian IT services companies in the country, reported a 12% rise in net profit for the first quarter of FY24, even as it registered weak revenue growth during this period and signaled a downcast demand environment.

The net profit for the first quarter stood at Rs 2,870 crore while the gross revenue during this period came in at Rs 22,830 crore which was a 6% year-on-year growth.

However, it is the revenue guidance of Wipro for the second quarter of FY24 which displays the challenges from the broader macroeconomic environment. The company said the revenue from the IT services business will be in the range of $2,722 million to $2,805 million, translating into a guidance of -2.0% to +1.0%.

In US dollar terms, the revenue from the IT services segment for the first quarter came at $2778.5 million, which was a sequential decline of 2.1%. The company attributed this decline in revenue primarily due to slower business conditions from three main segments—BFSI, communication, and technology.

On the performance of the company, Wipro CEO Thierry Delaporte said, “Businesses are reducing their discretionary spending and this had an impact on our revenue.”

“We are in a time of uncertainty and companies are not necessarily forward-looking on how to spend. It is too early to tell when we will recover," he added.

The company is bullish about future prospects as it saw total bookings of $3.7 billion for the first quarter and the large deal total contract value stood at $1.2 billion.

Wipro reported an operating profit margin of 16% for the first quarter which was a sequential decline of 0.3%. The company has managed to maintain this margin primarily because it has deferred the wage hike for its employees.

Wipro CFO Jatin Dalal said, “Our ongoing focus on operational improvement has ensured that margin remains steady even in a softening revenue environment.”

The Wipro CEO said the company will be looking at improving its margins from the current level of 16%.

The employee headcount at the end of the first quarter stood at 249,758 which was down 8,812 people when compared to a sequential three-month period. This also saw the company reporting an attrition rate of 14% for the quarter, which is an eight-quarter low.

Wipro on Wednesday announced an investment of $1 billion into building its AI capabilities with the launch of a new platform focused on this technology.