Wipro’s IT services revenues may have been in line with their guidance, but that hardly counts for much considering the much better performance of its peers.
Wipro’s revenues grew a meagre 0.2 per cent in dollar terms, against TCS and Infosys which delivered 2-4 per cent sequential growth in revenues.
Even profit margins didn’t meet expectations and declined 20 basis points sequentially. The silver lining if at all in the results has been the positive guidance of 2-4 per cent growth for the coming quarter. Wipro has been investing in winning more deals over the last two years, but this has hardly yielded results. It continues to grow slower than the overall industry.
The positive outlook cited by Wipro’s peers TCS and Infosys has helped re-iterate the improved demand environment for outsourcing this fiscal. But Wipro may not take full advantage of this. Within verticals, the energy business drove growth with sequential growth of 5 per cent in constant currency. While Finance and Retail verticals grew 1-2 per cent, the rest languished with a flattish to declining growth.
Among geographies, the growth was led by the Asia Pacific region, followed by Europe that grew 1.5 per cent. Both the US and India business declined - not a good sign when the US is in recovery mode. Utilisations were down 130 basis points to 73.3 per cent during the quarter.
In terms of client profile, the company has added 28 clients this quarter, the lowest in the last three quarters. The results offer no trigger for the stock to be re-rated. It may continue to trade at a discount to its peers, as consistency in the volume recovery will be critical to a re-rating.