Beating street expectations, Bengaluru based-IT major Wipro posted an 18.9 per cent year-on-year (YoY) growth in its consolidated net profit in the second quarter of the financial year at Rs 2,930 crore on the back of large deals, especially in the clouds space, and surpassed the $10 billion milestone of annualised revenue run rate.
However, it posted a 9.6 per cent sequential decline in net profit in Q2, attributed to squeezing of margins on account of salary hikes and amortisation charge on acquisition of London-headquartered consultancy firm Capco in the previous quarter. The operating margin declined to 17.1 per cent in Q2 compared to 18.8 per cent in the previous quarter.
"We sustained our operating margins in Q2 in a narrow band even after absorbing the full impact of our recent acquisitions and investing significantly in our business across sales, capabilities, and talent," said Jatin Dalal, Chief Financial Officer. We completed a salary increase covering 80 per cent of our colleagues, making it the second hike in this calendar year. We delivered a robust growth in earning per share of 23.8 per cent YoY," he added.
The attrition rate rose sharply to 20.5 per cent from 15.5 per cent in Q1 as the demand for IT professionals increased. It added a record 11,475 people in Q2. It hired 8,150 freshers during the quarter, higher than the target of 6,000.
The company will hire over 12,000 freshers in the current financial year, up 33 per cent from last year. Amid strengthening demand and rising attrition, the IT major will be doing over 30,000 hiring from the campus for the next financial year 2022-23.
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Going ahead, the company is expecting a 2-4 per cent growth in its net profit sequentially and 27 per cent on a YoY basis.
Wipro reported $2.58 billion in revenue for the quarter ended September 2021, up 6.9 per cent on a sequential basis and 29.5 per cent YoY.
Americas 2, which includes banking, securities, investment banking and insurance, manufacturing and Canada, accounted for the highest revenue share at 30.6 per cent, posting a 7.1 per cent sequential growth and a 31 per cent growth YoY. It was followed by Europe, which accounted for 30.2 per cent of company's revenues, posting a 7.1 per cent QoQ growth and 50.1 per cent YoY growth.
Thierry Delaporte, the company's CEO and Managing Director, said that "the Q2 results demonstrate that our business strategy is working well. We grew at over 4.5 per cent organic sequential growth for a second quarter in a row, resulting in a 28 per cent YoY growth in the first half of this financial year."
Deven Choksey, MD, KR Choksey Investment Managers said that there will be pressure on margins because of high churn rate in the IT industry. "However, looking at the deal pipeline, the company should be seen favourably," he added.