India’s third largest software exporter, Wipro’s net profit fell 13.8% year-on-year to ₹1,885.7 crore in the second quarter ended September as it recorded a loss of ₹514.1 crore from one of its key customers.
The Bengaluru-based firm posted a revenue of ₹14,541 crore compared with ₹13,423.4 crore during the same period the previous year. Sequentially, IT services revenue rose by 6.2%. IT services margin for the quarter margin at 14.6% was down 260 basis points from the first quarter.
The company expects revenue from IT services business to be in the range of $2,028 million to $2,068 million.
Comparable revenue excluding India state-owned enterprises and “India government business” for the second quarter was $2,007 million, translating to sequential growth outlook of between 1% and 3%. Wipro has seven strategic business units and revenue from its communications segment fell to ₹882 crore from ₹858.3 crore. “IT services margin for the quarter September 30, 2018, includes a loss of ₹5,141 million from the settlement with one of our key customers. Adjusted IT services margin excludes the impact of this loss,” according to a company statement.
The firm, however, did not disclose the name of the customer.
“Wipro has delivered a strong quarter on both revenue and margin growth,” Abidali Z. Neemuchwala, CEO and member of the board said.
Bags biggest deal
“We won our largest deal to date and four of our business units grew over 4% sequentially in constant currency terms. The demand environment is robust, especially for digital transformation and enterprise scale modernisation services. While our technology business has been doing well, we are expecting Q3 to be impacted by furloughs. In the health segment, we continue to see a challenge driven by the uncertainty mourned ACA (Affordable Care Act) which continues to persist.”
Jatin Dalal, CFO, said: “Consistent improvement in our operating metrics reflects our relentless rigour of execution, which has resulted in our adjusted IT services margin reaching 18.1% in quarter two. We see automation as a key lever to drive margins going forward.”
Wipro bagged a contract from a large North American bank to help create a new digital bank. It also won a contract from a global pharmaceutical company to streamline and modernise its clinical trial process for vaccines through an experience-led approach.
The firm has got a multi-year deal from a global beverages retailer to deliver a digital workplace management solution to manage the client’s worldwide physical assets.
“Our digital revenue continues to grow strongly and increased 13.4% sequentially in Q2,” Mr. Neemuchwala said. “It now contributes 31.4% of our revenues. Our digitally trained workforce crossed the 10,000-mark in Q2 and we now have almost 102,000 of our employees trained in digital technologies.”
He said the U.S. continued to see pick up in growth across industry segments. “Also, we are seeing better momentum in the Asia Pacific and emerging markets grew 7.9% sequentially on a constant currency basis.” Bhanu Murthy, COO, said the firm’s digital strategy revolved around three pillars and overall deal pipeline looked robust. “One part is the capability. The ability to design. The second is the engineering. We have introduced modern methods of building software into applications. The third is about the strategy with the customer. We have learned operational insights. This provides a good operational insight into the customer,” he said in an interview.
Wipro also appointed former SBI chairman Arundhati Bhattacharyaas independent director for five years effective January 1, 2019.
The appointment, approved by the board of directors of the company on Wednesday, is subject to the approval of shareholders, according to a BSE filing.
“I am confident that her deep repository of knowledge spanning across the financial services sector combined with her understanding of technology and proven expertise in driving operational transformation will immensely benefit Wipro,” Azim Premji, chairman, Wipro, said.
Ms. Bhattacharya said: “I am delighted and privileged to be invited to join the Board of Wipro Ltd., an organisation which is globally respected both for its technology leadership and its unflinching commitment to values. I look forward to contributing to the company’s growth charter.”
Ms. Bhattacharya is a postgraduate degree holder in English. She is also an Associate of the Indian Institute of Bankers.