Software services exporter Wipro Ltd today reported a 38% rise in fourth-quarter profit, helped by a strong performance from its banking, financial services and insurance segment. Wipro's net profit rose to ₹2,484 crore in the three months to March 31, from ₹1,803 crore in the same period a year earlier. Revenue from its mainstay IT services business grew 11.1%, driving the Bengaluru-based company's total revenue to ₹15,038 crore ₹13,824 crore last year.
In dollar terms, IT services revenue of Wipro rose to $2,075.5 million, a growth of 1.4% quarter-on-quarter. Its IT services business reported an operating margin of 19% for the quarter.
Wipro also announced ₹10,500 crore share buyback at a price of ₹325, joining the growing ranks of IT firms returning surplus cash to their shareholders. Wipro's shares today closed 2.5% lower at ₹281, ahead of the earnings announcement.
Cash-rich Indian IT companies have been returning cash in their books to shareholders through buybacks and dividends. In 2017, Wipro had carried out an ₹11,000 crore share buyback programme. Share buybacks improve earnings per share and return surplus cash to shareholders while also supporting share price during periods of sluggish market conditions.
Infosys had earlier this year approved an ₹8,260-crore share buyback. TCS, India’s biggest IT services exporter, had also carried out a ₹16,000 crore share buyback last year.
Outlook for the quarter ending June 30, 2019
Wipro expects revenue from its IT services business to be in the range of $2,046 million to $2,087 million. "This translates into a sequential growth of -1.0% to 1.0% excluding the impact of the divestment of our Workday and Cornerstone On Demand business which was concluded in the quarter ended March 31, 2019," the company said.
Bengaluru-based Wipro's cross-town rival Infosys had reported revenues of $3,060 million, a growth of 2.4% quarter-on-quarter. In terms of profitability, Infosys's operating margin in the March quarter dropped 3.2 percentage points from a year ago, to 21.5%. Infosys has guided for a 7.5-9.5% growth in constant currency terms for FY20. Infosys expects margins to remain suppressed in FY20 as well, guiding for in a range of 21-23%.
For the March quarter, TCS reported revenue of $20,913 million, with an operating margin of 25.6%. (With Agency Inputs)
