Wipro decided to buyback its shares worth up to Rs 10,500 crore. "Board approved share buyback for up to 32.3 crore shares at Rs 325 apiece."
Wipro has reported 1 percent sequential fall in fourth quarter consolidated profit at Rs 2,483.5 crore on weak revenue growth.
In March quarter profit declined to Rs 2,483.5 crore from Rs 2,510.4 crore in Q3.
The company's IT services revenue in rupee terms fell 0.5 percent quarter-on-quarter to Rs 14,586.5 crore.
Its IT services revenue in dollar terms grew 1.4 percent sequentially to $2,075.5 million in Q4, which was within the company's given guidance of 0-2 percent but was slightly below analyst estimates due to pressure in traditional revenues.
CNBC-TV18 poll estimates were at $2,082 million (a growth of 1.7 percent QoQ).
Dollar revenue growth was driven by digital business (up 6.3 percent QoQ) while revenue in constant currency terms grew by a percent QoQ led by consumer business unit, healthcare and BFSI.
"Our teams have executed well on our strategy which has resulted in consistent improvement of YoY growth each quarter. We have built a strong foundation for growth on the back of healthy order book and continued investments in big bet areas of Digital, Cyber security, Engineering services and Cloud," Abidali Z Neemuchwala, CEO and Executive Director said.
Wipro's IT services revenue guidance for the first quarter of the financial year 2019-20 was also lower than analyst estimates.
The company expects revenue from its IT services business to be in the range of $2,046-2,087 million, which translates to a sequential growth of (-1.0 percent) to 1.0 percent.
The guidance excluded the impact of the divestment of Workday and Cornerstone On Demand business which was concluded in the quarter ended March 31, 2019.
Analysts had largely expected Q1FY20 guidance in the range of 0-3 percent growth over Q4FY19.
The much-awaited share buyback has been announced by the IT firm while releasing March quarter earnings.
Wipro said it would purchase up to 323.1 million equity shares of Rs 2 each (representing 5.35 percent of total paid up equity capital) from the shareholders of the company on a proportionate basis by way of a tender offer, which is subject to the approval of shareholders.
The buyback price is Rs 325 ($4.71) per equity share payable in cash for an aggregate amount not exceeding Rs 10,500 crore ($1.5 billion), it added.
At operating level, numbers were lower on sequential basis but were above analyst expectations.
IT services EBIT (earnings before interest and tax) declined 3.5 percent quarter-on-quarter to Rs 2,807.7 crore and margin contracted by 84 bps to 19 percent in Q4FY19. CNBC-TV18 poll estimates for EBIT and margin were at Rs 2,769 crore and 18.7 percent for the quarter, respectively.
The company added three clients in $75 million category and one client in $10 million during the quarter
For the year, Wipro recorded a 13 percent growth in profit at Rs 9,003.7 crore and 10 percent growth in consolidated IT services revenue at Rs 56,825.3 crore compared to previous fiscal.
Operating margin for the year expanded to 17.9 percent in FY19 against 16.1 percent at the end of FY18.
"Our rigor in execution and focus on improved quality of revenues has resulted in operating margins expansion of 1.8 percent for the year. Operating cash flow was robust and 129.2 percent of net income for the year," Jatin Dalal, Chief Financial Officer said.
The stock fell 2.5 percent on Tuesday ahead of its quarterly earnings which announced after market hours. However, it rallied 29 percent in last one year.
Though Wipro’s results were in line with market estimates, the outlook has been disappointing with the guidance of -1 to 1 percent for the June 2019 quarter.
The June quarter is a seasonally weak quarter for Wipro as it sees productivity discounts in some of its engagements in Q4 that accumulate in Q1. But the company this year has a healthy deal pipeline and good traction in its digital and cloud business in the upcoming quarter.
Abidali Z Neemuchwala, CEO and Executive Director, told media persons on Tuesday, “We have a very strong pipeline and order booking in Q4 but some of these projects take a longer to get started as we run these projects up. That is why guidance is always in that range as we execute through the quarters.”
Neemuchwala further added that the company has been selective in some of the deals as it acquires and renews them. “But there are tonnes of large deal pipeline. We see very good traction in digital and cloud business,” he added.
But some of the legacy business of Wipro is not doing as well and has hence declined. “We have the choice of staying with it or eventually going to go,” he said.
Neemuchwala said the net effect is what you see in our guidance. “Digital, cloud and all of your big business show very healthy growth and I feel very good about it,” he added.
Digital has grown 6.4 percent sequentially and now accounts for about 35 percent of total revenue. Digital grew 32.2 percent year-on-year.While the number of new customers has increased from 220 in FY2017-18 to 271 in FY2019, a number of total active customers have come down to 1115 in FY2019 from 1178 in FY2017.