Bengaluru: Wipro Ltd posted better-than-expected revenue growth for the fiscal fourth-quarter but offered a disappointing revenue growth outlook of -1% to 1.0% for the June quarter.
Wipro, India’s fourth largest IT services company by revenue, also announced a bonus of one free share for every three shares held by shareholders. The Wipro board also approved a ₹10,500 crore buyback plan under which it will acquire up to 323 million shares at ₹325 apiece.
Wipro’s dollar revenue improved 9% year-on-year (y-o-y) to $2.2 billion in the quarter ended 31 March. Revenue grew 7% on a quarter-on-quarter basis.
A Bloomberg survey of 31 analysts had forecast revenue of $2.18 billion, or ₹15,069.40 crore, in the March quarter. They also forecast a profit of $359.31 million, or ₹2,489.20 crore.
In dollar terms, Wipro’s net profit declined to $359.1 million in the fourth quarter from $366 million at the end of the third quarter. Consequently, the company’s operating margin fell to 19% in Q4 from 19.8% in Q3. In constant currency terms, Wipro managed a 7.5% y-o-y growth in Q4 revenue although it fell 1% sequentially.
“Our rigour in execution and focus on improved quality of revenues has resulted in operating margins expansion of 1.8% for the year (in constant currency). The announcement to buy back equity shares is part of our philosophy to deliver efficient returns to shareholders," said Jatin Dalal, senior vice-president and chief financial officer at Wipro.
In rupee terms, Wipro’s revenue for the fourth quarter of FY19 rose to ₹15,000.63 crore, from ₹13,768.86 crore a year earlier. Revenue in the last financial year grew 7.5% to ₹58,584.5 crore from ₹54,487.1 crore.
Wipro’s net profit in rupee terms jumped 38% to ₹2,483.3 crore for the fourth quarter from ₹1,802.8 crore a year earlier. For the full year ended 31 March, net profit increased 12% to ₹9,003.1 crore.
Wipro’s revenue from clients in banking, financial services and insurance (BFSI), comprised 31.5% of overall revenue, compared to 28.7% in the same period a year earlier, in constant currency terms. US and Europe accounted for majority of the revenues in Q4.
Sanjoy Sen, senior research fellow—strategy and governance, Loughborough University, UK, said the fourth quarter results “continue the positive note of this quarterly season following TCS and Infosys".
“This is hardly a coincidence. On the contrary, this is the dividend from the long investments made in acquiring capabilities to address the digitally disruptive world that their clients operate in. It is just that these digital transformation initiatives at their clients are at a peak, with the added realisation that the scarce resource to deliver resides in Indian IT companies. However, organizations such as Wipro must keep up their focus on operational excellence and cost management to ensure that the top line growth hits the bottom line and is not eroded away by increasing global and domestic costs," Sen said.
The results were declared after market hours. On Tuesday, Wipro lost 2.45% to close at ₹281.1 apiece underperforming a 0.95% gain in the benchmark Sensex which closed at 39,275.64 points. The BSE IT Index gained 0.05% to 15,590.77 points.
Wipro’s buyback programme is its second in about 15 months and the third since 2016. It had undertaken a ₹2,500 crore programme in 2016, and another ₹11,000 crore buyback offer in November-December 2017.
The buyback was proposed to be made from the existing shareholders of the company through a tender offer route in accordance with the provisions, Wipro chief executive officer and executive director Abidali Neemuchwala said.