Wipro resumes guidance, approves ₹9,500 crore share buyback2 min read . Updated: 13 Oct 2020, 08:03 PM IST
Wipro’s board on Tuesday also approved a proposal to buy back up 23.75 crore equity shares or 4.16% of the total paid up equity at ₹400 apiece for an aggregate amount up to ₹9,500 crore
Bengaluru: After two quarters, Wipro Ltd has resumed the practice of providing quarterly guidance indicating improvement in business visibility. It expects a sequential revenue growth of 1.5-3.5% in the range of $2.02 billion to $2.06 billion from its IT services business for the third quarter-ended December on the back of improvement in demand environment and a robust deal pipeline.
Wipro’s board on Tuesday also approved a proposal to buy back up 23.75 crore equity shares or 4.16% of the total paid up equity at ₹400 apiece for an aggregate amount up to ₹9,500 crore. Last week, Tata Consultancy Services (TCS) Ltd’s board approved a proposal to buy back up to ₹16,000 crore worth of shares to reward shareholders.
Wipro which has been lagging peers for several years now is looking at a course correction under its newly-appointed chief executive officer and managing director, Thierry Delaporte, who joined the company in July. Delaporte has embarked on a five-point strategy that revolves around growth, focus and scale, offerings, building talent with domain expertise, and simplification of the operating model.
The context for our customers has changed enormously through the pandemic. While the traditional IT services will continue to be essential, the next big wave of opportunity will be driven by next generation services of cloud, digital transformation, internet of things (IoT), and 5G," Delaporte said.
The Bengaluru-based IT major posted a 3.2% sequential growth in net profit to ₹2,465 crore for the second quarter ended September on the back of improved utilization and improvement in offshore revenue. On a y-o-y basis however, the net profit declined 3.4%.
The gross revenue for the September quarter rose 1.4% sequentially and declined 0.1% y-o-y to ₹15,114.5 crore as growth in consumer and financial services segments improved. The closely-watched IT services revenue in dollar terms grew 3.7% q-o-q and declined 2.8% y-o-y to $1.99 billion.
Wipro’s IT services operating margin improved to 19.2% in the September quarter from 19% in the June quarter. “It was another quarter of strong performance on margins and cash flows. We improved on several operating parameters to deliver margin expansion of 0.2% in the IT services segment," said Jatin Dalal, chief financial officer, Wipro.
Wipro also announced that it has signed a definitive agreement to acquire Eximius Design, a leading engineering services company with strong expertise in semiconductor, software and systems design, for up to $80 million. This acquisition is expected to help Wipro to expand into newer market segments and help customers in next-generation technologies such as connected products, embedded artificial intelligence (AI), and security.
Ahead of the earnings announcement, Wipro shares on Tuesday were down 0.48% to close at ₹375.75 on the BSE. “Healthy quarter, improving margins and improving revenue trajectory prompt us to be positive on the stock," ICICI Securities said.