Wipro Q1 takeaways: Acquisition boosts growth, margins outlook firm

MUMBAI: Wipro reported one of its best-ever quarterly performances in history on Thursday, as earnings for the June quarter trounced Street expectations. The IT services major managed a 12 per cent sequential growth in consolidated topline, coupled with over 9 per cent jump in consolidated net profit for the three-month period.

“Despite the severe onslaught of the pandemic, we delivered our best-ever quarter, with secular growth across all SMUs, sectors and GBLs. Our sequential revenue growth of 12.2 per cent was well ahead of the top-end of our guidance range, both organically and with Capco,” said Thierry Delaporte, Chief Executive Officer and Managing Director at Wipro.

Here are the major takeaways from the Bengaluru-based company’s first quarterly earnings of the financial year:

Growth momentum continues
Wipro’s higher-than-expected sales growth despite lack of major deal wins during the quarter suggested that the company is being able to convert large deal wins in the previous quarter more efficiently. While the growth was boosted by the integration of Capco, even on an organic basis, the company’s topline grew 4.9 per cent sequentially. “We have seen steady acceleration of growth across the organization month after month,” Delaporte said in a post-earnings press conference. This acceleration helped the company to guide for 5-7 per cent sequential growth in sales in the September quarter.

Attrition remains a concern
Wipro saw a sharp jump in attrition rate during the quarter, something that has become a sector-wide phenomenon. Attrition rate jumped to 15.5 per cent from 12.1 per cent in the previous quarter despite the wage hikes undertaken by the company earlier this year. Wipro said the situation will remain similar in coming quarters even as the company committed to hiring 12,000 freshers in 2021-22 and 22,000 in 2022-23. Despite the rise in attrition, the company asserted that it will have no bearing on its topline growth as it has managed to create models that will help it continue the sales growth momentum.