Wipro Q2 net profit up 3.2%; sees revenue rising 1.5-3.5% in Q3
15 Oct 2020
Wipro has reported a 3.2 per cent increase in its fiscal second quarter net profit to Rs2,466 crore. even as revenue increased by 0.1 per cent YoY or 1.4 per cent QoQ to Rs15,110 crore ($2.1 billion).
Wipro board also approved a Rs9,500-crore share buyback plan. Wipro will purchase 237.5 million shares at Rs400 apiece.
IT services segment revenue was up 3.7 per cent QoQ at $1,992.4 million. In constant currency terms IT services segment revenue increased by 2.0 per cent QoQ.
IT services operating margin for the quarter stood at 19.2 per cent, an increase of 0.2 per cent QoQ and 1.1 per cent YoY.
"This was led by operational improvement of about 80 bps, offset by 60 bps in PAT of appreciated rupee," said CEO Theirry Delaporte during the earnings call.
Earnings per share for the quarter stood at Rs4.33 ($0.061), an increase of 0.7 per cent YoY.
Operating cash flow was at Rs4,410 crore ($600.1 million), which works out to 179 per cent of net income.
Wipro expects its IT services revenue in the third quarter to grow 1.5 per cent to 3.5 per cent.
"We were able to absorb the adverse impact of FOREX movements and still expand operating margins by 20bps," added CFO Jatin Dalal. Even though specific guidance was issued for margins, Dalal shared that the company plans to keep it within a narrow band, not accounting for unexpected currency fluctuations.
Its attrition level has improved to around 11%, with the company adding more than 30,000 employees to its roster over the last three months.
It also announced the acquisition of US-based engineering services company Eximius Design, which will likely be included in its third quarter earnings.
“Our strategy is to focus on growth in prioritised sectors and markets led by vertical solution offerings,” said Wipro CEO Thierry Delaporte.
Wipro announced plans to buy-back a total of 4.16 per cent of its paid-up equity capital.
"You have to keep in mind that there is a tax outflow for the company which is roughly around Rs2,000 crore to Rs2,400 crore, on top of the Rs9,500 crore of buyback. And, therefore, we have thought through that. We’re transparent in our communication that this Rs9,500 crore comes directly to shareholders and tax is excluded on that," explained Dalal.
The buyback will be the company’s fourth in the last five years and the second by an Indian IT services company this fiscal year.
Tata Consultancy Services (TCS) too announced share buyback worth ?16,000 crore after its second quarter earnings last week. It plans to pick 53 million equity shares for ?6,000 per share, amounting to 1.42 per cent of TCS’ total paid-up equity capital.
A company is allowed to buy back shares up to 10 per cent of its net worth without the approval of shareholders, according to the market regulator’s guidelines. With the requisite approval, it can buy up to a fourth of its net worth.