Margin pressure hits Wipro’s bottom line

Bengaluru: Wipro posted a mixed set of performance in the fourth quarter of last fiscal as IT major posted a fall in its revenue sequentially though it was able to maintain its operating margin. The Azim Premji-backed company guided for a weak Q1 performance with top line falling in the range of 1-3 per cent on sequential basis owing to macroeconomic uncertainty and softness in financial services vertical.

The board of Wipro approved Rs12,000 crore share buyback programme through the tender route at a price of Rs445 per share, 19 per cent premium over Thursday’s closing price.

For the fourth quarter, posted a consolidated net profit of Rs3,074 crore for the fourth quarter ended March 2023, down 0.4 per cent over a year ago. Revenue for the quarter rose 11.2 per cent at Rs23,190 crore.

The Bengaluru-headquartered company’s revenue from IT services, which constitutes more than 95 per cent of its gross revenue, was at $2.82 billion, which was a fall of 0.6 per cent over the previous quarter in constant currency term. In comparison, TCS saw its revenues growing at 0.6 per cent sequentially in CC term, while Infosys revenue dropped 3.2 per cent on sequential basis.

For the whole fiscal, Wipro reported a revenue of $11.2 billion, a growth of 11.5 per cent in constant currency term over FY22. Despite strong deal bookings, the company guided for a revenue growth of -3 per cent to -1 per cent in Q1 of ongoing fiscal year, translating to a range of $2.75 billion to $2.81 billion. This projection included revenue from India State Run Enterprise (ISRE) segments, which the company decided to merge with the IT services business from FY24.

“We closed FY23 with the strongest-ever bookings recorded in a year. We delivered two consecutive quarters of total bookings of over $4.1 billion. In demand term, we are seeing some weakness in the discretionary spend space. We also see softness in the financial services vertical. However, we don’t expect any radical change in demand environment in coming quarters,” Thierry Delaporte, CEO and MD of Wipro said addressing the press conference.

The company, which won $4.1 billion worth outsourcing contracts, had a large deal TCV (total contract value) of $1.1 billion during the quarter ended March 2023.

Operating margin from IT services segment remained flat at 16.3 per cent in March quarter as the company got benefitted from sharp drop in attrition and improvement in employee utilization.

“We continue to maintain our focus on operational improvements and productivity enhancements which led to our IT services margin exit at 16.3 per cent in Q4 despite macro headwinds,” said Jatin Dalal, Chief Financial Officer, Wipro.

During the quarter, the company’s employee attrition rate was at 19.2 per cent, a fall of 330 basis points from the previous quarter. Wipro also saw its headcount declining by 1,823 employees at 256,921 by the end of March quarter.

We closed FY23 with the strongest-ever bookings recorded in a year. We delivered two consecutive quarters of total bookings of over $4.1 bn. In demand term, we are seeing some weakness in the discretionary spend space. We also see softness in financial services vertical

-Thierry Delaporte, CEO and MD, Wipro