IT major Wipro Ltd on Friday reported a 7.60 per cent year-on-year (YoY) drop in consolidated net profit at Rs 2,858.20 crore compared with Rs 3,093.50 crore in the same quarter last year. The consolidated revenue from operations fell 4.23 per cent YoY to Rs 22,208.30 crore compared with Rs 23,190.30 crore in the same quarter last year. Anlaysts were expecting a 4-8 per cent drop in profit and a 4-5 per cent drop in sales. (Analyst views below)
Wipro said its IT services segment revenue came in at $2,657.4 million for the quarter, up 0.1 per cent QoQ and down 6.4 per cent YoY. Its constant currency (CC) IT Services segment revenue fell 0.3 per cent QoQ and 6.6 per cent YoY.
Deal wins, margin, attrition
Total deal wins stood at $3.6 billion. Large deal bookings came in at $1.2 billion, up 31.1 per cent QoQ and 9.5 per cent YoY. IT services operating margin for the quarter stood at 16.4 per cent, up 40 bps QoQ. Chief Financial Officer Aparna Iyer said: “We expanded our margins by 40 basis points during the quarter resulting in EPS growth of 5.2 per cent QoQ in Q4. Despite a challenging macro-environment our IT services margin expanded by 50 basis points for the full year FY24. We generated highest operating cash flow in recent years which is at 183 per cent of our net- income in Q4 and 159% on a full year basis.”
Voluntary attrition stood at 14.2 per cent on a trailing 12-month basis.
Wipro Q1FY25 (June quarter) outlook
Wipro said it expects revenue from IT Services business segment to be in the range of $2,617 million to $2,670 million. This translates to sequential guidance of (minus) 1.5 per cent to a growth of 0.5 per cent in constant currency terms.
Wipro management commentary New CEO and Managing Director Srini Pallia said: “FY24 proved to be a challenging year for our industry, and the macroeconomic environment remains uncertain. However, I am optimistic about the opportunities that lie ahead. We are on the brink of a major technological shift. Artificial intelligence is transforming our clients’ needs as they seek to harness its power for competitive advantage and enhanced business value. At Wipro, we have been gearing up for this moment," he said.
Wipro capital Allocation The Board of Directors confirmed the interim dividend of Re 1 declared by the board earlier at its meeting held on January 12th, 2024, shall be considered as the final dividend for the financial year 2023-24.
Wipro appointments
In another filing, Wipro said its board approved the re-appointment of Rishad A. Premji as Whole-Time Director designated as Executive Chairman for a period of 5 years with effect from July 31, 2024 to July 30, 2029.
The board also re-appointed Azim H. Premji as Non-Executive, Non-Independent Director for a period of 5 years with effect from July 31, 2024 to July 30, 2029.
Analyst views
Sanjeev Hota, Head of Research, Sharekhan at Wipro said reported revenue was in line with his estimates. EBIT margin of IT services expanded 40 bps QOQ to 16.4 per cent, above his estimates of 15.6 per cent.
"Revenue growth guidance of -1.5-0.5 per cent for Q1FY25 was lower than expectations and reflects continuing pressure in the near term. Headcount continued to decline for the sixth consecutive quarter. Utilisation improved 290 bps point to 86.9% while Attrition remained unchanged at 14.2 per cent. The quarterly numbers are a mixed bag, however, weaker than expected guidance continues to disappoint. Further the recent sudden change of CEO brings about additional element of uncertainty in the near term before potential turnaround in the medium to longer term. We have hold rating on Wipro," he said.
Biswajit Maity, Senior Principal Analyst at Gartner said despite experiencing muted revenue growth, Wipro maintained a strong business pipeline. Wipro's growth momentum was impact by several factors - higher-than-expected inflation rates and delays in decision-making, resulting in longer deal-signing timelines.
"Securing large deals is crucial to their growth strategy. Although Wipro's attrition rate is slightly lower than average, some clients still express concerns about resource allocation, potentially affecting growth momentum. Additionally, Q4 result reflects a slight increase in attrition compared to Q3."