Wipro said on Friday that its Q3 consolidated net profit fell about 8.4% to ₹1,930.1 crore year-on-year as the company’s IT services margins came under pressure due to an insolvent customer. Revenue for the IT major declined from ₹14,336.4 million to ₹14,294.9 million for the three months ended December 31, according to a filing on the BSE.
The IT services margins fell by 250 basis points in the quarter to 14.8%. Jatin Dalal, CFO, Wipro said, “We have recorded a provision of ₹3.2 billion consequent to insolvency of a customer, post balance sheet, which has impacted our IT services margins in Q3.”
After provisioning for that the “adjusted IT services margins for the quarter were 17.2% down as compared to Q2,” he said. IT services revenue grew 3% year-on-year to $2,013 billion, missing the previous quarter’s guidance of between $2,014 billion and $2,054 billion. The firm expects Q4 IT services revenue to be between $2,033 million and $2,073 million.
“Our healthcare business is bottoming out... and we have delivered a strong performance in Q3,” said Abidali Neemuchwala, CEO. “Performance in energy and utilities has been impacted by some customer specific issues, in spite of a rebound in energy business.”
‘Ticket sizes rising’
“We continue to see strong growth in our digital ecosystem as it grew by 5.1% in the last four quarters and now constitutes more than 25% of revenues.” The firm was seeing ticket sizes in digital deals increasing as customers were moving to the ‘next level’ of adoption, he said. “We have almost 90,000 technical employees trained on digital skills.”
The number of $50-million accounts rose to 41 from 33 in the earlier quarter. “In the first nine months of the current fiscal year, we have generated robust operating cash flow of ₹77 billion, 14.2% more than the same period last year,” Mr. Dalal said.
U.S. accounted for 53.1% of Wipro’s IT services revenue while Europe followed with 25.9%.
As on January 19, 2018, Mr. Premji, who gave up studies at Stanford University to take care of the family’s cooking oil business in 1996 and later expanded to software, has a net worth of $20.7 billion, according to Forbes list of Indian billionaires.
Amit Chandra, analyst, HDFC Securities, said the margins and offline growth of legacy verticals “were disappointing. We expected some pickup in revenues which did not happen. Revenue guidance is also on the lower side.”
“The management commentary on revenue growth coming up to industry standards is not happening. Currently, revenue is being fuelled by digital.”
