IT services firm Wipro Ltd. on Tuesday announced a share buy-back proposal worth ₹9,500 crore even as the second-quarter net profit dipped 3% to ₹2,484 crore on higher taxation and lower other income.
The company has fixed the buy-back price at ₹400 an equity share, Wipro said.
This is the firm’s fourth buy-back exercise, the previous occasions being 2019 ($1.7 billion), 2017 (₹11,000 crore) and 2016 (₹2,500 crore).
“The net profit is lower owing to a higher effective tax rate and lower other income as we completed a large buy-back in September,’’ said CFO Jatin Dalal.
Meanwhile, consolidated revenue dipped 0.1% to ₹15,115 crore from the year-earlier period. The consolidated IT services revenue stood at ₹14,768 crore.
“Wipro had a good quarter with growth [q-o-q] in revenue, expansion of margins, lower employee turnover and solid growth of operating cash flows,” said CEO Thierry Delaporte.
The revenue growth of 3.7% in reported terms and 2% in constant currency terms was broad-based and led by a robust pick up in volumes, he added.
‘IOT, 5G to drive wave’
He further said, “The context for our customers has changed enormously through the pandemic.
“While the traditional IT services will continue to be essential, the next big wave of opportunity will be driven by next generation services of cloud, digital transformation, IOT and 5G.’’
Wipro has set its priorities as gowth, sales, offerings, talent and simplification of operating model.
Wipro expects revenue from its IT services business to be in the range of $2,022 million to $2,062 million. This would mean a sequential growth of 1.5% to 3.5%.
Wipro also said it would hand out promotions to high performers in December. Some 80% of the staff would be covered under this year’s promotion plan.
Firm to buy Eximius
Wipro has also entered into a definitive agreement to acquire U.S.-based Eximius Design, an engineering services company with expertise in semiconductor, software and systems design, for $80 million.
Wipro has made three small acquisitions after Mr. Delaporte took over in July. “We want to play a key role in M&As. We will be active and do acquisitions in areas that we consider as strategic and size will not be a limit for us,” he said.
“Wipro’s revenue, though not stellar, are strong given the present circumstances,” said Hansa Iyengar, senior analyst, Ovum, a U.K.-based research firm. “Wipro needs to continue sharpening its focus on the services and technologies that can carry it through the next decade and beyond namely IoT, 5G/Edge, AI/ML and cybersecurity,” she added.