Wipro Q3 result registers net profit up 21% to Rs 2,968 cr; check other key highlights

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New Delhi: IT services major Wipro on Wednesday posted an about 21 per cent jump in consolidated net profit at Rs 2,968 crore for the December 2020 quarter, and said the demand environment is improving steadily. The net profit attributable to shareholders in the year-ago period was at Rs 2455.9 crore, according to a regulatory filing by Wipro.

The company logged 3.9 per cent quarter-on-quarter growth in IT services revenue, the "highest in 36 quarters". Overall, the revenue from operations grew nearly 1.3 per cent to Rs 15,670 crore in the quarter ended December 2020 as compared to the corresponding period of the previous year. Earnings per share for the quarter was at Rs 5.21, an increase of 20.7 per cent year-on-year.

Wipro, which gets a bulk of its topline from IT services, said it expects revenues from that business to be in the range of USD 2,102 million to USD 2,143 million in the March 2021 quarter. This translates into a sequential growth of 1.5 per cent to 3.5 per cent for the March quarter, and the company said the outlook reflects the current demand environment and strength of its new and improved operating model.

"Last year, we witnessed some very unprecedented times and now with improved vaccine prospects, we are filled with optimism for 2021. We are very hopeful that it will be a better year for the society, for businesses, our clients, and for us," Wipro CEO and Managing Director Thierry Delaporte said at an earnings call.

He further said the growth in Q3 was broad-based and several operating metrics were at "all time best", including offshore mix and utilisation. Wipro said its order book is strong across sectors and service offerings, and that there is significant traction in markets and all key geographies.

The demand in Europe is particularly strong, driven by acceleration in adoption of cloud and digital transformation, Delaporte added.

The company's focus now is "only on growth" and on "accelerating the momentum", he pointed out. For the just-ended quarter, IT services revenue grew 3.9 per cent sequentially to USD 2,071 million.

In October, Wipro had said it expects its revenue from IT services business to be in the range of USD 2,022-2,062 million for the December quarter, a sequential growth of 1.5-3.5 per cent.

"Wipro has delivered a second consecutive quarter of strong performance on order booking, revenue and margins. Five of our sectors grew over 4 per cent sequentially. We closed our largest ever deal win in Continental Europe," Delaporte said in a statement.

The demand environment is steadily improving, especially for digital transformation, digital operations and cloud services, he added. The company's revenue from IT products during the December quarter was about Rs 160 crore (USD 21.3 million), while that from India state run enterprises business was Rs 240 crore (USD 32.8 million).

Wipro Chief Financial Officer Jatin Dalal said margins are at a 22-quarter high.  "The expansion was led by improved revenue growth trajectory and excellence in operations with several metrics at an all-time high. Our operating cash flows grew by 45 per cent year on year with a significant improvement in outstanding receivables," Dalal said.

Listing out the highlights for the quarter, Wipro said it closed it largest deal in Continental Europe with Metronom.
Wipro's total employee count stood at 1,90,308 as on December 31, 2020. 

Delaporte further said the company has started to make investments in frontline sales and domain specialists. "For 80 per cent of our employees, we completed the promotion cycle effective December 1?and we will also be rolling out salary increases for them effective January 1. We have also announced a 100 per cent variable payout for Q3 and Q4, which will make it three consecutive quarters of full payout," he said.

Wipro's margins for Q4 will have "headwinds" of these investments but "will still remain elevated", he added. The company has declared a dividend of Re 1 per equity share. The payment of interim dividend will be made on or before February 2, 2021, the company said.

Wipro shares closed marginally higher at Rs 458.7 apiece on BSE on Wednesday. The results were declared after market hours.
Sanjeev Hota, Head of Research, Sharekhan by BNP Paribas, said Wipro has reported "slightly better-than-expected revenue performance, while margin front continued to beat our estimates."

The company has given revenue growth guidance in the range of 1.5-3.5 per cent sequentially, "slightly better than our expectations", Hota added.

On Wednesday, Infosys too announced its Q3 scorecard. The country's second largest IT services firm posted a 16.6 per cent rise in consolidated net profit at Rs 5,197 crore in the December 2020 quarter. It also increased its revenue growth guidance for FY21 to 4.5-5 per cent on the back of large project wins and strong deal pipeline.

Larger rival Tata Consultancy Services (TCS) had last week reported a 4.1 per cent quarter-on-quarter revenue growth -- its strongest third quarter growth in nine years -- on the back of healthy deal closures.

Its topline rose 5.4 per cent to Rs 42,015 crore in the December 2020 quarter over the corresponding period last fiscal, while net profit was up 7.2 per cent to Rs 8,701 crore.