Wipro posts 4% rise in net profit in Q4

Wipro, the country’s fourth-largest software services company, on Friday reported earnings broadly in line with the Street estimates for the quarter ended March. Operating margins, however, were below expectations. The company reported a 4% quarter-on-quarter increase in net profit to Rs 3,090 crore versus Bloomberg consensus estimates of Rs 3,011 crore, aided by lower taxes.

The revenue for the March quarter increased 3% sequentially to Rs 20,860 crore. The company had a sequential constant currency (CC) growth of 3.1% during the quarter. Wipro’s operating margins came in at 17% adjusted for the acquisition of Capco, a global management and technology consultancy. This was a decline of 60 basis points on a q-o-q basis, leading to an operating income of Rs 3,546 crore, which was flat sequentially. However, the margins were well above the pre-pandemic levels.

Commenting on the performance, Thierry Delaporte, CEO and MD, said: “We have had an outstanding year and an industry-leading growth. This is our sixth straight quarter of strong revenue growth at over 3%. With all markets, sectors and global business lines now growing in double digits year-on-year, we have a strong foundation for next year’s growth.”

Wipro has guided a sequential growth of 1-3% in the company’s revenue from IT services in the first quarter of the current financial year. “This will translate into a growth of 16-18% on a y-o-y basis in constant currency. We expect to grow in double digits in fiscal 2023 as well. Our margins in the medium term will hold in the 17-17.5% band. However, we will see slightly lower margins for the next 2-3 quarters because of the investments that we have made,” Delaporte said.

The company signed nine large deals in the three months to March 2022 with a TCV of $0.4 billion versus $0.6 billion in the quarter ended December 2021. For the full year ended March 31, 2022, the company closed 37 large deals, resulting in total contract value (TCV) of over $2.3 billion. Customer count in more than $100 million account moved from 11 to 19 and in the over $50 million account moved from 40 to 50 during the year.

Jatin Dalal, chief financial officer said, “Our efforts on client mining have resulted in an addition of eight customers in more than $100 million bucket on y-o-y basis. We delivered operating margins of 17.7% for the year, after significant investments on solutions, capabilities and talent. Net income for the year was highest ever and delivered robust growth in EPS of 17% y-o-y.”

The attrition levels continued to inch up with record high levels of 23.8% in the January-March period, up 110 basis points sequentially. In the December quarter, the company’s attrition was at 22.7% and 20.5% in the quarter ended September 2021. However, Delaporte said the company’s quarterly annualised attrition rate has moderated by 500 basis points and the company doubled its fresher intake in FY22 to 19,000 and plans to double it again in FY23. The company had 45,416 of net additions in headcount during the year, and exited FY22 with a total headcount of 243,128 employees.

We have decided to increase the frequency of promotion cycle for 70% of our colleagues in the junior bands to a quarterly basis,” he said.

Wipro recorded a double-digit growth in all its markets in Americas and Europe, growing at 28% and 29.3%, respectively, on a y-o-y basis during the quarter. All the sectors that the company has presence in ― BFSI, consumer, health, energy and technology – all grew in double digits. Manufacturing and communication, however, grew 7% and 5%, respectively, during the quarter.

For the full year ended March 31, the company recorded a net profit of Rs 12,233 crore, an increase of 12.5% over last year. The company’s revenue for the year was up nearly 22% to Rs 79,093 crore over last year, while operating margins came in at 17.7% with a decline of a sharp 260 bps.