Wipro’s Q4 net profit rises 4%, aided by digital demand

Wipro Ltd expects revenue for the first quarter ending 30 June to be in the range of $2.74 billion-$2.80 billion. This translates to a sequential growth of 1-3%, lower than the 2-4% it had guided for the March quarter. Unlike Infosys, which gives a forecast for the full fiscal year, Wipro gives its estimates for the quarter ahead.

The Bengaluru-based company’s net profit for the March quarter rose nearly 4% to ₹3,087 crore from ₹2,972 crore in the year-ago period, in line with Bloomberg estimates of ₹3,005 crore.

The revenue for the March quarter grew 29.4% annually to ₹20,860 crore on the back of a strong demand environment for digital solutions. Revenues were in line with consensus Bloomberg estimates of ₹20,819 crore. Revenue in dollar terms grew 3.1% sequentially to $2.72 billion on the back of some large deal wins and expansion in smaller deals. The revenue for FY22 grew 26.9% in constant currency to $10.4 billion, crossing the $10 billion mark.

“This is our sixth straight quarter of strong revenue growth at or over 3%. We are excited about the addition of Rizing and the CAS Group to Wipro’s service offerings. With all markets, sectors, and global business lines now growing in double-digits year-on-year, we have a strong foundation for next year’s growth,” said Thierry Delaporte, chief executive and managing director of Wipro.

The operating margin narrowed to 17% in the March quarter from 21% a year ago and 17.6% in the preceding three months, owing to high costs related to attrition and hiring. The voluntary attrition rate on a last 12-month basis for the March quarter rose to 23.8% from 12.1% a year ago and 22.7% in the December quarter. The company is, however, confident of retaining top talent through various employee-centric initiatives such as giving freshers a five-year growth plan, said Saurabh Govil, chief human resources officer, Wipro.

Wipro made a net addition of 45,416 people during FY22, taking the total headcount to 243,128 employees as of 31 March 2022. Further, the company will onboard about 40,000 freshers in FY23, double what it had hired in the previous fiscal year.

Effective last January, Wipro reorganized its IT services segment into four strategic market units, all of which projected strong growth during the March quarter. On an annual basis, while Americas 1 and Americas 2 grew 22.2% and 33.8%, respectively, Europe grew 36% in constant currency, and Asia Pacific Middle East Africa (APMEA) region grew 14%.

The two global business lines—iDEAS (Integrated Digital, Engineering & Application Services) and iCORE (Cloud Infrastructure, Digital Operations, Risk & Enterprise Cyber Security Services)—grew 38.5% and 15.2% year-on-year in constant currency, respectively, during the March quarter.

Analysts believe the earnings align with Wipro’s vision of becoming a transformational player. “The organization has been working on digital transformation for its clients for quite some time and is one of the early adopters of digital capabilities. Its healthy pipeline is promising but is dependent on its resources and employee churn for proper execution. Wipro’s business outcome-based Fullstride Cloud Services looks promising for customers, and Wipro continues to evolve its platforms,” said D.D. Mishra, senior director analyst, Gartner. Wipro reported its earnings after market hours on Friday. Ahead of its earnings, Wipro shares fell 2.59% to ₹509 on BSE.