Business

Wipro sees slowdown in financial services

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Q3 net drops 2.17%, revenue up 2.73%

Tech major Wipro on Tuesday said the market has been witnessing some level of uncertainty due to various geo-political risks while the overall demand environment has neither improved nor deteriorated.

It also said it witnessed a growth slowdown in financial services due to continued market stiffness driven by macro-economic environment.

Wipro posted a 2.17% year-on-year drop in its consolidated profit for the third quarter ended December 31.

It reported a profit of ₹2,455.8 crore in Q3 against ₹2,510.3 crore a year ago. Total revenue stood at ₹15,470.50 crore or a 2.73% increase over the ₹15,059.50 crore clocked in the year-earlier period.

Addressing the media, Abidali Z. Neemuchwala, CEO and MD, Wipro, said the firm delivered a ‘good’ quarter in terms of revenue and margin. Revenue grew 1.8% in constant currency terms, at the mid-point of the guidance range.

“We have delivered a good quarter with secular growth across all business units, geographies and practices.”

In his detailed commentary on Q3 performance, Mr. Neemuchwala said, “We are pleased with our performance in consumer business which grew 12.1% yoy (cc) this quarter and we have also experienced a sustained rhythm in deals wins.’’

The energy and utility space continued to grow moderately. Health saw a seasonal uptick, while the technology business was impacted by furlough and a slowdown in spending by customers in the semi-conductor sector.

Wipro saw a slowdown in financial services.

Encouraging order book

“However, we expect recovery in manufacturing and are encouraged by the order book and deal pipeline,’’ he said.

For the quarter ending March, Wipro expects revenue from the IT business to be in the range of $2,095 million to $2,137 million, a sequential growth of 0-2%, a modest forecast.

Wipro CFO Jatin Dalal said, “We expanded operating margins by 0.3%, aided by a favourable movement in the currency. Further, we generated strong operating cash flows led by disciplined execution at 124% of our net income,” he added.

The technology major’s digital revenue grew 22.8% year-on-year (constant currency terms). It currently accounts for 40% of the total revenue.

On its cloud initiative, Wipro said its investment in cloud studio continued to pay off. “We have accelerated cloud journey for our customers by migrating more than 39,000 workloads and 2900 plus apps,”' said the company.

Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said Wipro reported in-line revenue growth in CC terms, while EBIT margin of IT services remained marginally below our estimates. CC revenue growth during the quarter was aided by 0.3% of ITI acquisition. Q3 revenue growth guidance is on the expected lines. BFSI revenue growth remained tepid, while consumer and manufacturing business continued to perform well during the quarter. Wipro has provided a revenue growth guidance of 0-2% q-o-q CC revenue growth for Q4FY20E. “We continue to believe that Wipro would lag in revenue growth among its large peers and remain our least preferred stock,” he said.

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Printable version | Jan 29, 2020 12:58:19 AM | https://www.thehindu.com/business/wipro-sees-slowdown-in-financial-services/article30569518.ece

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