Wipro’s net jumps 35.1% in Q2

Firm sees early signs of recovery in manufacturing and healthcare verticals

Wipro has reported a sharp 35.1% jump in its net profit to ₹2,552.6 crore in the second quarter compared to the same period the previous year. On a quarter-on-quarter basis, net profit grew 6.2%.

The tech firm said it hit the mid-point of its guidance and posted a total revenue of ₹15,125.6 crore in the September quarter, a 4% year-on-year increase.

On a quarter-on-quarter basis, the company posted 2.7% growth, against ₹14,716 crore in Q1.

IT and digital transformation services account for more than 90% of Wipro’s total businesses.

Abidali Z. Neemuchwala, CEO and MD, said, “We had a good in-quarter execution on both revenues and margins. The overall growth was broad based with 6 out of 7 industry verticals growing on a YoY basis and we signed a large deal in India aligned to our strategy of taking global offerings to India customers.” On an organic basis, we believe the growth guidance would be slightly better than our expectations, he said. BFSI, communication and healthcare remained weak during Q2, while consumer and manufacturing business performed well during the quarter. EBIT margin of product business turned to positive during the quarter.

Mr. Neemuchwala further said, “Our revenues grew by 1.1% in constant currency terms, at the mid-point of our guidance range.

For H1, our growth was 4.8% yoy in constant currency terms.’’

Jatin Dalal, chief financial officer said, Wipro had delivered operating margins in a tight range after absorbing the impact of two months of wage hike. “Growth remains our priority and we remain invested for future. We also successfully completed the share buy-back programme in September, which saw strong participation from our investors.’’

In its outlook for the quarter ending December 31, 2019, Wipro expects revenue from IT services business to be in the range of $2,065 million to $2,106 million. This translates to a sequential growth of 0.8% to 2.8%, said the company.

“We have delivered operating margins of 18.1% in Q2 2020 against 18.4% in Q1 2020 after absorbing incremental impact of wage hike for two months and investing in bench for growth,’’ said Mr. Neemuchwala.

Robust digital pipeline

Wipro said, in BFSI it had strong set of offerings and a robust pipeline of digital deals. Growth, however, has decelerated due to softness in spend by banking and capital market clients in some pockets and completion of large digital transformation projects.

Healthcare grew 3%, BFSI 5.9% and energy and utility grew at 6.3%, all YoY in constant currency. The global business in communications grew at double digit on YoY basis in CC, while remained volatile impacting overall growth.

“We see early signs of recovery in both manufacturing and healthcare. We see an uptick in demand in healthcare outside of HPS and have had some good deal wins in digital,’’ the company said.

However, Mr. Neemuchwala added the demand environment remained unchanged for IT spends, though there was an overhang of macro uncertainty in certain sections.

Wipro’s said it has been winning digital deals in core markets. “We are winning integrated, transformational deals in Canada, Australia, APAC and of course in our key markets of the U.S. and U.K. In digital, our revenue grew 7.0% QoQ in CC and 29.0% YoY in CC and now contributes 39.6% of our revenues,’’ he said.