Bengaluru: Wipro struggled to grow its business in the first quarter as clients delayed projects in an uncertain market, even as larger peers Infosys and Tata Consultancy Services delivered better results and projected double-digit growth in the year ahead.
Wipro saw sequential revenue in the quarter drop 0.7 per cent, with CEO Abidali Neemuchwala calling it “disappointing”. The company, however, expects revenue to grow faster for the full year.
For the second quarter, Wipro has forecast flat 2 per cent growth.
Operating margins stood at 18.4 per cent, a drop of 80 basis points, due to salary hikes.
Analysts expressed unhappiness with the performance, calling the Wipro stock the least preferred among top-tier IT companies.
“Wipro earnings were a miss on revenues front, with 1.8 per cent Q-o-Q decline on reported basis, even considering Workday divesture, revenues missed our estimates. Industry vertical performance across BFSI, manufacturing, healthcare remains soft for the quarter,” Sanjeev Hota, head of research, Sharekhan by BNP Paribas wrote in a note.
Wipro continues to remain our least-preferred IT player among the top tier and we have a HOLD rating on the stock, he said. Wipro, however, said that the comparison should be made without including Workday revenues in the previous quarter.
Other analysts have questioned whether Wipro would be able to deliver on its promise considering that it has to grow faster in the last six months of the year.
“Wipro’s Q2 guidance is softer and it means the company will have to post higher growth in Q3 and Q4 to achieve a number in this fiscal which is higher than the 5.4 per cent growth delivered in FY19,” said Kuldeep Koul, lead IT analyst, ICICI Securities. “From that standpoint, there is a risk to that expectation. They did allude to the reasons for that and said some of the discretionary projects are getting delayed in terms of ramp-ups”.
Neemuchwala said the company was hopeful of faster growth as it signed new deals in July.
