Moneycontrol
Last Updated : Jul 20, 2018 05:08 PM IST | Source: Moneycontrol.com

Wipro sees 0.3-2.3% growth in Q2 IT services revenue: Here are 10 key takeaways from Q1 earnings

Wipro stock price corrected 9 percent year-to-date, underperforming its peers TCS, Infosys and HCL Technologies that rallied 47 percent, 27 percent and 10.5 percent, respectively.

Moneycontrol News @moneycontrolcom
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Software firm Wipro started off the financial year 2018-19 on a strong note as earnings for the June quarter were ahead of analyst estimates.

"We have seen pickup in spending in the developed markets, particularly in North America and BFSI. Our investments in Digital continue to help us build differentiation in key industry segments, which is resulting in a consistent improvement in our client metrics," Abidali Z Neemuchwala, CEO said.

The company has had a good quarter of order bookings, he added.

The share price closed at Rs 283.05, down 0.77 percent ahead of June quarter earnings announced after market hours today.

The stock price corrected 9 percent year-to-date, underperforming its peers TCS, Infosys and HCL Technologies that rallied 47 percent, 27 percent and 10.5 percent, respectively.

Here are 10 key takeaways from April-June quarter earnings:

Profit

Company's consolidated profit for the quarter ended June stood at Rs 2,093.8 crore, registering a 16.3 percent growth compared to Rs 1,800.8 crore in March quarter.

Revenue

Consolidated revenue during the quarter grew by 1.5 percent to Rs 13,977.7 crore compared to Rs 13,768.6 crore in previous quarter.

Company's IT services business, which generally follow by analysts on the Street, increased 2.15 percent sequentially to Rs 13,700 crore in Q1.

Numbers beat analyst expectations, which on an average expected IT services revenue at around Rs 13,509 crore for the quarter.

Wipro said IT Services segment revenue in dollar terms stood at $2,026.5 million, down 1.7 percent sequentially.

Constant currency IT Services segment revenue grew by 0.1 percent sequentially.

Operational Performance

Wipro also beat analyst estimates on operational front as IT Services EBIT (earnings before interest and tax) grew by 24 percent quarter-on-quarter to Rs 2,397 crore and margin expanded by 310 basis points to 17.5 percent in Q1FY19.

EBIT for the previous quarter stood at Rs 1,932.3 crore and margin at 14.4 percent.

Analysts on an average had expected EBIT at Rs 2,169 crore and margin at around 16 percent for the quarter.

"We continue to improve our operating metrics and generated strong operating cash flows at 136 percent of net income during the quarter," Jatin Dalal, Chief Financial Officer said.

Q2 Guidance

Wipro expects revenue from IT Services business to be in the range of $2,009 million to $2,049 million for July-September quarter.

"This translates to a sequential growth of 0.3 percent to 2.3 percent, excluding the impact of the divestment of our hosted data centre services business which concluded in the quarter ended June 30, 2018," the IT firm said.

Large Deals

Wipro has won an applications cloud migration contract from a European investment bank for their repository of applications while a major US airline has renewed its multi-year contract with the company for global contact center support and other business process services.

It has won a multi-year business process operations transformation contract from an Australian construction and property management company while it has been awarded a multi-year cargo management contract by LATAM Cargo S.A., a leader in air cargo transport to, from and within Latin America.

The IT firm also won a multi-year quality engineering transformation contract from a leading African financial services company.

Wipro added 1 client each in $50 million band and $5 million band, and 2 clients in $10 million band. However, it lost 1 client in $75 million category, 4 in $20 million, 1 in $3 million and 7 in $1 million band.

Geography and segment-wise growth

Banking, Financial Services and Insurance business grew by 1.1 percent sequentially and 3 percent in constant currency while manufacturing segment degrew by 7.1 percent and 5.4 percent in constant currency.

Americas business showed a 2.4 percent growth QoQ and 2.9 percent in constant currency while Europe degrew by 6.6 percent QoQ and 3 percent in constant currency.

Image120072018

Attrition

Voluntary attrition (trailing twelve months) in IT services excluding BPS increased to 17 percent in Q1 from 16.6 percent in Q4FY18 while voluntary quarterly annualised attrition stood at 17.7 percent for the quarter, which increased from 17.5 percent in March quarter.

Employees count at the end of June quarter stood at 1,64,659, which increased from 1,63,827 at the end of March quarter.

Utilisation

Gross utilisation in the IT services business ((excluding Infocrossing, BPS, Designit, Cellent, HPS, Appirio, Cooper, Infoserver and I&ME) improved to 74.5 percent in June quarter against 73.1 percent in March quarter.

Net utilisation (excluding support) improved to 83.9 percent from 82.4 percent while net utilisation (excluding trainees) rose to 85.2 percent from 83.4 percent QoQ.

IT Products Business

IT products segment revenue for the quarter ended June was Rs 353.2 crore, declined 15.3 percent compared to Rs 416.9 crore in Q4FY18.

It reported loss of Rs 74 crore at EBIT level against EBIT of Rs 4.8 crore QoQ.

Strategic Partnership

Wipro and Alight Solutions announced a long-term relationship which will reshape the HR services industry by providing Alight's clients with the breadth and depth of capabilities from the two industry-leading organisations.

This strategic partnership1 will enable Alight to accelerate investment in consumer-facing technologies and services across its health, wealth and cloud businesses by leveraging Wipro's industry-leading strengths in automation, machine learning and data analytics.
First Published on Jul 20, 2018 05:07 pm
Loading...
Sections
Follow us on
Available On