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Wipro has posted a quarter of lower profits, while being able to maintain margins on the back of a combination of challenges — from higher wage costs to clients holding back spending.
India’s third-largest software services exporter also issued a guidance on its revenue from IT services to be in the range of $1,916-1,955 million, or 0-2 per cent, for the third quarter ending December, which, analysts say, is weak.
Wipro, however, clarified that it has issued the guidance due to issues such as furloughs and fewer working days.
For the second quarter, Wipro had given a guidance of 0-1 per cent, and ended up delivering 0.9 per cent sequential revenue growth. The company posted an 8.2 per cent year-on-year decrease in net profit at ₹2,070 crore for the second quarter of the current fiscal year.
It had reported a net profit of ₹2,241 crore in the year-ago period.
Total revenue for the period stood at ₹14,407 crore, a 9.1 per cent growth when compared to the ₹13,198 crore it had posted in the year-ago period.
Sectoral malaise Wipro’s not-so-stellar performance was reflected by competitors TCS and Infosys, with the former revising its guidance downwards for the second consecutive time this fiscal.
“Tech spends are increasingly transferring from run bucket to change bucket, and this is a significant transition for the IT services industry,” said CEO Abidali Z Neemuchwala.
In this backdrop, Wipro acquired Appirio on Thursday for $500 million in an effort to make a stronger push in the cloud computing segment.
The company believes this acquisition will start yielding results from January. Wipro’s flagship IT services business revenue came in at ₹13,137 crore while the IT services segment’s profit was ₹2,340 core, a decrease of 5 per cent compared to same period last year.
Wipro Ventures, the VC arm of Wipro, has so far made eight investments, with a committed spend of around $22 million. In the second quarter, it invested in Israel-based InSights Cyber Intelligence, a cyber security company.
Wipro’s shares rose less than 1 per cent to ₹499. The earnings were announced soon after the trading session.
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