Wipro Q2 net profit rises 3.7% to ₹2,659 cr sequentially, but isn’t as optimistic about Q3

• Wipro’s Q2 net profit grew 3.7% sequentially to ₹2,659 crore.
  
• The IT company’s revenues grew 4.7% sequentially to ₹22,540 crore.
  
• Wipro said that it expects the IT services business revenue to grow by 0.5-2% in Q3.
  

IT services major Wipro today reported a 3.7% sequential increase in its second quarter net profit to ₹2,659 crore, as against ₹2,564 crore in Q1. While the net profit charted a rebound after a 17% drop reported in Q1, it’s still below analyst expectations.

Its operating revenues grew 4.7% sequentially to ₹22,540 crore in the same period. Its IT services business grew 4.1% sequentially in terms of constant currency to $2.8 billion, marginally below its guidance in the previous quarter.

“Our strong performance in the quarter is further proof that our strategy is yielding the intended results. The solid growth in our bookings, large deal signings, and revenues underscore our improved market competitiveness and enhanced value proposition,” said Thierry Delaporte, CEO and managing director, Wipro.

For the December quarter, Wipro said it expects the IT services business revenue to be in the range of $2.81-2.85 billion, which translates to a sequential growth of 0.5-2%.

“As the market conditions evolve, I believe our comprehensive portfolio of differentiated offerings position us extremely well to serve the changing needs of our clients and help them face the challenges of an uncertain macro environment with confidence,” said Delaporte.

Wipro said its large deal wins increased 42% year-on-year in the first half of FY23.

Here’s Wipro’s Q2 FY23 at a glance:


Source: Company reports

Wipro’s margins have been stressed, and a falling rupee has not helped the company’s bottomline enough. The company’s margins contracted on both sequential as well as year-on-year basis. This was a problem for Wipro in the previous quarter as well.

“We achieved (operating) margins of 15.1% in Q2 after absorbing the impact of salary increases and promotions. Our margin improvement was led by better price realisations and strong operational improvements in automation-led productivity,” said Jatin Dalal, Wipro’s chief financial officer.

For the quarter, employee wages at ₹13,726 crore, accounting for 60.9% of its revenues, wages had accounted for 57.3% in the June quarter, and 56.5% in the same quarter last year.

Wipro’s attrition rate for the September quarter stood at 23%, continuing to improve marginally each quarter. For context, its attrition rate stood at 23.3% in the June quarter, and 23.8% in the March quarter.

The company added only 605 new employees to its roster in Q2 FY23.

On a positive note, the company reported a bounce back in its major geographies, with the key markets of Americas reporting double-digit growth in profits. Europe posted a strong comeback after declining 19% in the previous quarter.

The contribution from the American region went up from 74% in the previous quarter to 78% in the current quarter, further increasing Wipro’s dependence on this region.


Source: Company reports

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