Wipro Q3 Results: Operating margin beat, deal wins among 5 key takeaways from earnings card
Agencies
Synopsis
The IT major has guided for -1.5% to 1% sequential growth in its IT services business revenue. This translates to a revenue of $2.62-$2.67 billion in the March quarter in constant currency terms. Most analysts had expected Wipro to give -1% to +1% growth in constant currency revenue.
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After TCS and Infosys, IT services company Wipro's third quarter results were largely in line with expectations. The Bengaluru-based software company reported a 12% fall in its net profit to Rs 2,694 crore, while revenue declined 4% to Rs 22,205 crore.
Wipro has guided for -1.5% to 0.5% sequential growth in its IT services business revenue. This translates to a revenue of $2.62 billion to $2.67 billion in the March quarter in constant currency terms.
Most analysts had expected the Bengaluru-based software company to give -1% to +1% growth in constant currency revenue.
"From a quarter-on-quarter perspective, there is a decrease. Actually, there is no growth, but that is what has been the expectation so far. So, there is no surprise there," said Mahantesh Sabarad, Independent market expert on Wipro's guidance.
Wipro saw a lower-than-expected sequential contraction in IT services operating margin to 16% in the December quarter. On a year-on-year (YoY) basis, margins expanded 63 basis points.
"We are building a more resilient, agile, and efficient organization which has helped us sustain our margins at 16% despite revenue headwinds and absorbing the impact of the investments we are making for growth and people," said Aparna C Iyer, CFO, Wipro.
Analysts say there is still margin headroom available in terms of improvement ahead.
In a seasonally weak third quarter, the IT firm won deals worth $3.8 billion, up 0.2% sequentially, and large deal bookings were a little over $900 million.
Voluntary attrition continued to moderate QoQ, coming in at a 10-quarter low of 12.3% in the third quarter.
The company's board has approved payment of an interim dividend of Re 1 per equity share each and fixed January 24 as the record date. The payment of the interim dividend will be made on or before February 10, 2024.
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Here are five takeaways from Wipro's Q3 results.Guidance
Wipro has guided for -1.5% to 0.5% sequential growth in its IT services business revenue. This translates to a revenue of $2.62 billion to $2.67 billion in the March quarter in constant currency terms.
Most analysts had expected the Bengaluru-based software company to give -1% to +1% growth in constant currency revenue.
"From a quarter-on-quarter perspective, there is a decrease. Actually, there is no growth, but that is what has been the expectation so far. So, there is no surprise there," said Mahantesh Sabarad, Independent market expert on Wipro's guidance.
Operating margin beat
Wipro saw a lower-than-expected sequential contraction in IT services operating margin to 16% in the December quarter. On a year-on-year (YoY) basis, margins expanded 63 basis points.
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"We are building a more resilient, agile, and efficient organization which has helped us sustain our margins at 16% despite revenue headwinds and absorbing the impact of the investments we are making for growth and people," said Aparna C Iyer, CFO, Wipro.
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Analysts say there is still margin headroom available in terms of improvement ahead.
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Deal wins
In a seasonally weak third quarter, the IT firm won deals worth $3.8 billion, up 0.2% sequentially, and large deal bookings were a little over $900 million.
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"We are starting to see early signs of a return to growth in Consulting, as demonstrated by the double-digit growth in order bookings in our Capco business," the company's CEO Thierry Delaporte said.Attrition
Voluntary attrition continued to moderate QoQ, coming in at a 10-quarter low of 12.3% in the third quarter.
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Dividend
The company's board has approved payment of an interim dividend of Re 1 per equity share each and fixed January 24 as the record date. The payment of the interim dividend will be made on or before February 10, 2024.
