Wipro Q4 net profit rises 38%, announces Rs 10,500-crore share buyback

Wipro has largely met the Street estimates on the revenue and profit fronts for the fourth quarter of 2018-19, though the revenue growth reported by the country's third-largest IT services firm was the lowest among the top three players in the last financial year.

The company, however, gave a tepid outlook for the first quarter of FY20, citing delays in starting out new projects. The firm also announced a mega buyback plan of Rs 10,500 crore at Rs 325 a share, making it the second such repurchase consecutively. The buyback price is 15.4 per cent higher than Tuesday's closing price on the NSE.

For the fourth quarter of the last fiscal year, Wipro on Tuesday reported a consolidated net profit of Rs 2,483.5 crore, a rise of 37.7 per cent over the year-ago period.

Sequentially, it declined one per cent. For the whole fiscal, net profit was Rs 9,000 crore, a growth of 12.4 per cent on a year-on-year (YoY) basis. Gross revenues of Wipro in Q4 rose 9 per cent YoY to Rs 15,006 crore. For the whole fiscal year, revenues stood at Rs 58,584 crore, up 7.5 per cent on a YoY basis. Unlike its two other larger peers, Wipro showed a marked improvement in its operating margin, which improved 440 basis points YoY to reach 19 per cent in the January-March quarter. The margin improvement was aided by the divestment of low margin business.

Wipro’s IT services revenue, which accounts for more than 95 per cent of its gross revenues now, was $2.075 billion for the January-March period of FY19. "We have executed strongly in the fourth quarter with focus on quality of revenue. We see the demand environment as stable with strong deal pipeline," said Abidali Neemuchwala, CEO at Wipro.

For the first quarter of the current fiscal year, Wipro gave a tepid guidance of -1 per cent to 1 per cent in revenue growth excluding the impact of divestment of some of its businesses. "Our outlook for Q1 of FY20 has factored in the seasonality factor. Also, delay in starting out some new projects is also another reason for this slow growth. However, we expect to accelerate our growth from Q2 onwards," Neemuchwala added. In January-March period, the company reported good growth in verticals like BFSI with 1.3 per cent sequential growth, while its consumer business unit also rose by 5.3 per cent. However, communications, energy, natural resources and utilities had a negative sequential growth in Q4 of FY19.

Wipro saw its total headcount at 171,425 at the end of March quarter, a fall of around 900 employees against the preceding quarter. Its overall attrition, however, remained at 17.6 per cent, a drop of 30 basis points over the previous quarter.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel