Wipro’s Q3 net profit at Rs 2,969 crore year-on-year, up 1.3% sequentially – World Affairs SRS

Wipro’s Q3 net profit at Rs 2,969 crore year-on-year, up 1.3% sequentially

– World Affairs SRS

IT services major Wipro’s consolidated net profit stood at Rs 2,969 crore for the December quarter (Q3FY22) quarter. The bottom line rose 1.3 percent on a sequential basis and was marginally below road estimates.
The weak net profit performance was due to weak operating performance and a decrease in other income. While operating profit margin in the core IT vertical was down 410 basis points year-on-year at 17.6 per cent, the decline in second earnings was due to buy backs after Q3, FY21.

Aided by growth in most key segments, consolidated revenue grew 29.6 per cent year-on-year and 3.3 per cent to Rs 20,314 crore. For the IT segment, while the reported sequential growth was 2.3 per cent, on a constant currency basis, the company posted a growth of 3 per cent. This was lower than the consensus estimates which had projected a growth of 4 per cent.
In dollar terms, QoQ growth was led by the consumer vertical which was up 4.7 per cent while the banking, financial services and insurance or BFSI vertical grew by 3.5 per cent. Together they account for half of the company’s total revenue.
Commenting on the results, Thierry Delaporte, CEO and Managing Director, said this was the fifth consecutive quarter of strong performance on both revenue and margins. Our strategy and better execution are serving us well and we are confident of moving ahead at this pace, he added.
The road was disappointing though. Analysts at Prabhudas Lilladher say Wipro cut revenue after four quarters of better performance. According to the brokerage, the fall in revenue was due to the energy and utility vertical. The segment is its fourth largest, accounting for 11.7 percent of its revenue; Its revenue share was down 60 basis points sequentially. Although the company indicated that a major project in this section was scrapped and was not compensated; The pipeline in this segment remains strong. The technology segment was also sluggish and reported flattening performance due to holiday(s).
While third-quarter revenue was below par, the company indicated that order bookings remained strong. The company added seven new customers to the $100 million revenue bucket. Wipro closed the quarter with 11 major deals resulting in a total contract value of $600 million. The order book has seen a 27% year-on-year growth
Apart from the order book, margin movement will be the other key areas which should be looked into. IT services operating profit margin stood at 17.6 per cent, a decline of 19 basis points on a sequential basis. Margins were put under pressure due to salary hike in September, another increase in appointments this fiscal. According to Wipro Chief Financial Officer Jatin Dalal, in the next few quarters, the margin band could be in the range of 17-17.5 per cent as the company prioritizes on revenue growth, focuses on retaining and hiring talent and Adheres to delivery commitments.
The company has guided for revenue growth of 2-4 per cent sequentially in the March quarter (Q4, FY22).

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