New Delhi: Wipro, the head of IT services, invested Rs 2,968 crore on Wednesday, a jump of nearly 21 per cent in consolidated net profit for the December 2020 quarter, and said the demand environment was steadily improving. According to a regulatory filing by Wipro, the net profit for shareholders was Rs 2455.9 crore a year ago.
The company reported a 3.9 percent quarter-on-quarter increase in IT services revenue, the “highest in 36 quarters”. Overall, revenue from operations increased nearly 1.3 percent to Rs 15,670 crore for the quarter ended December 2020, compared to the same period in the previous year. Earnings per share for the quarter was Rs 5.21, an increase of 20.7 percent year-on-year.
Wipro, which gets its headlines from IT services, said revenue from that business was expected to be in the range of 2,102 million to 2,143 million USD in the March 2021 quarter. This changes to a gradual increase of 1.5 percent to 3.5 percent for the March quarter, and the company said the outlook reflects the current demand environment and strength of its new and improved operating model.
“Last year, we saw some very unprecedented times and now with prospects for a better vaccine, we are full of optimism for 2021. We very much hope that this is for society, for businesses, for our customers and for us Would be a better year. ” “Wipro CEO and Managing Director Thierry Delaporte said on an earnings call.
He further noted that the growth in Q3 was broad-based and that many operating metrics were “all-time best”, including offshore mixing and utilization. Wipro said its order book is strong enough for sectors and service offers, and has significant traction in markets and all major geographies.
Delporte said demand in Europe is particularly strong, driven by acceleration in the adoption of cloud and digital transformation.
The company’s focus is now “only on growth” and “accelerating momentum”, he reported. For the just-ended quarter, IT services revenue grew 3.9 percent sequentially to US $ 2,071 million.
In October, Wipro stated that it expected its revenue from the IT services business to be between US $ 2,022-2,062 million for the December quarter, a gradual increase of 1.5–3.5 percent.
DelPorte said in a statement, “Wipro delivered strong performance for the second consecutive quarter on order bookings, revenue and margins. Our five sectors grew sequentially by over 4 percent.
He said that in particular the environment of digital transformation, digital operations and demand for cloud services are constantly improving. The company’s revenue from IT products was around Rs 160 crore (USD 21.3 million) during the December quarter, while the turnover of enterprises from the state of India was Rs 240 crore (USD 32.8 million).
Wipro Chief Financial Officer Jatin Dalal said margins are at a 22-quarter high. The broker stated, “The expansion led to a revenue growth trajectory and excellence in operations as well as operations with multiple metrics. Our operating cash flow increased 45 percent year-over-year, with a significant improvement in outstanding receipts. “
Listing the highlights for the quarter, Wipro said it closed the largest deal with Metronom in Continental Europe.
As of December 31, 2020, Wipro had a total employee strength of 1,90,308.
Delaporte further stated that the company has started investing in frontline sales and domain experts. “For 80 percent of our employees, we completed the promotion cycle on December 1; and we will also release increments for them effective January 1. We also announced a 100 percent variable payout for Q3 and Q4, which Would make it three consecutive quarters of full payment, ”he said.
He added that Wipro’s margins for Q4 would have “headwinds” of these investments but would “still remain high”. The company has declared a dividend of Rs 1 per share per share. Interim dividend will be paid on or before February 2, 2021.
On Wednesday, Wipro shares closed marginally at Rs 458.7 on the BSE. The results were announced after market hours.
Sanjiv Hota, head of research at Sharekhan by BNP Paribas, said that Wipro “expected slightly better performance than revenue, while margins continued to drive our projections.”
The company has guided revenue growth sequentially in the range of 1.5–3.5 percent, “slightly better than our expectations”.
On Wednesday, Infosys also announced its Q3 scorecard. The country’s second-largest IT services firm reported a 16.6 percent increase in consolidated net profit to Rs 5,197 crore in the December 2020 quarter. It raised its revenue growth guidance to 4.5-5 percent for FY221 on the back of major project wins and a strong deal pipeline.
Big rival Tata Consultancy Services (TCS) reported a quarter-on-quarter revenue growth of 4.1 percent last week – its third quarter in nine years, the strongest third quarter – behind healthy deal closures.
Its topline grew 5.4 per cent to Rs 42,015 crore in the quarter ended December 2020 in the same period of the previous financial year, while net profit grew 7.2 per cent to Rs 8,701 crore.