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Wipro reported a strong growth in quarterly profits on account of investments made in automation, and considerably improved its margins in a seasonally weak quarter.
India’s fourth-largest software exporter issued a revenue guidance in the range of 0-2 per cent or $2.04–2.08 billion, which is more or less in line with the street estimates of 1-3 per cent.
Wipro reported a 32 per cent increase in net profit, which beat market expectations and is a reversal from the quarter ended September when it posted a 10 per cent decrease in profitability. The IT services major posted a profit of ₹2,544.4 crore against ₹1,935.9 crore in the year- ago period. On a sequential basis, net profit went up 34.9 per cent.
Revenues for the IT major rose 10% to ₹15,059 crore from ₹13,669 crore. The growth in revenue was aided by its $1.5-billion deal with US-based Alight Solutions LLC.
On a sequential basis, this was a 3.4 per cent growth, higher than its cross town rival Infosys’, which posted a 2.7 per cent growth.
“Our performance was satisfying on both revenue and margin fronts, and as we look ahead, we do not see any immediate impact from the macro headwinds. But we continue to be watchful,” said Abidali Neemuchwala, CEO and Executive Director, Wipro. He was referring to the US government shutdown and a no-deal Brexit, all of which is playing on the minds of corporates in the developed markets.
Margins of the company also saw a significant improvement. They are on the rise over the last two quarters, aided by operating efficiencies and currency headwinds, said CFO Jatin Dalal. The operating margins stood at 19.8 per cent, and in the last two quarters combined, went up by 976 basis points (9.7 per cent). Operating cash flow for the quarter was ₹3,566 crore and the company now has net cash of ₹25,103 crore.
Digital continues to grow and now contributes 33.2 per cent of its revenues.
The company also said it will issue bonus shares: one bonus equity share for every three fully paid-up equity shares held. The same amount of bonus will be available for the stock dividend on American depository receipt, as on the record date, it said.
Interim dividend
Besides, Wipro announced an interim dividend of ₹1 per equity share of par value, and ₹2 each to the members of the company. The payment of the interim dividend will be made on or before February 6. Wipro’s shares closed at ₹346 on the BSE.
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