IT major Wipro has recorded a 21 per cent profit rise, beating market estimates. While revenue and margins reported were largely in line with street estimates in Q2, the outlook for next quarter isn’t encouraging.
On a quarter-on-quarter (q-o-q) basis, profits were up 6.85 per cent. Revenue from operations stood at ₹22,302 crore, registering marginal growth on a sequential basis, and a 1 per cent YoY decline.
Wipro has tapered its guidance for the next quarter to (-) 2 per cent to 0.0 per cent in constant currency terms. It had guided in the range of -1 to 1 per cent for the second quarter previously.
The company said that guidance was adjusted for seasonal furloughs and fewer working days in the third quarter.
The revenue from the IT services business segment is projected to be in the range of $2,607-2,660 million.
With strong account mining and traction in the Capco business, BFSI continued to accelerate, delivering 2.7 per cent sequential growth. The growth in the just-concluded quarter was led by Americas, said the company. However sectorally, it noted a soft growth inmanufacturing, with a sequential decline of 2 per cent.
Focus areas
CEO & MD Srini Pallia stressed Wipro’s focus on the five key focus areas and building a strong talent pool to capture AI opportunities. He added, “The long-term potential of our business is strong, and we are prepared to handle the current economic uncertainties as we continue to invest in clients, strategic priorities, and building a strong AI-powered Wipro.”
Wipro continued to expand its top accounts, with large deal bookings surpassing $1 billion once again. During the quarter, it booked 19 large deals while maintaining its momentum for Capco for another consecutive quarter growing at 3.2 per cent sequentially and 6.9 per cent at a YoY basis.
The total bookings stood at $3.56 billion, marginally higher than the $3.3 billion signed last quarter. Large deal bookings were at $1.5 billion, an increase of 28.8 per cent on-quarter and 16.8 on-year in constant currency.
“We grew in three out of four markets, as well as, in BFSI, Consumer and Technology, and Communications sectors,” he added. The company also plans to implement Gen AI-powered solutions to solve business challenges and deliver operational efficiency.
Aparna C Iyer, Chief Financial Officer, said, “I am pleased with our performance across all parameters including Revenue, Bookings, Operating margin, cash flow and EPS. On the back of operational improvements, we further expanded our margins by 35 basis points and our EPS grew 6.8 percent QoQ. Our operating cash flow continues to be robust at 132.3 percent of net income in Q2. As a result, cumulatively in the first half of this year, we generated nearly $1B in operating cash flow.”
Attrition this quarter remained at 14.5 per cent. Headcount in Q2FY25 reduced by 502 to 2,33,889 employees from last quarter’s 2,34,391.
Bonus shares
In a first since 2019, the IT major announced it would issue bonus shares in a 1:1 ratio for its shareholders. The record date for the bonus shares is yet to be determined and they will be credited within two months of the Board’s approval, scheduled for December 15, 2024.
Biswajit Maity, Senior Principal Analyst, Gartner, said, “Wipro distinguishes itself through a flexible business model and has invested in enhancing delivery quality and speed while reducing internal costs through automation and AI, including the use of GenAI to accelerate application refactoring. These attributes reinforce Wipro’s position as a leading IT service provider in the global market.”
The shares of Wipro closed at ₹528.80 down by 0.65 percent on the BSE. Results were announced post-market closure in India. Wipro, which is listed on NYSE, saw its ADR down by 4.21 percent and was trading at $6.15 at the time of going to press.