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ET Intelligence Group: Wipro’s second quarter numbers were not as spectacular as its larger peer Tata Consultancy Services (TCS). But, it did report a sequential improvement across verticals while holding the operating margin at a level elevated through cost rationalisation in the previous quarter. On the headcount front, attrition continued to drop for the fifth quarter in a row while net hiring was at a two-quarter high sequentially, which signals a sustainable demand recovery.
In addition, after a brief lull in the previous two quarters, the country’s fourth largest IT company issued a quarterly guidance predicting up to 3.5% sequential jump in the dollar denominated revenue in the third quarter. This looks promising given that the growth is anticipated over the 3.7% topline increase it reported for the September quarter on a low base in the form of a sharp 7.3% drop in the March quarter.
While Wipro’s revenue growth in the September quarter looks lame in front of the 7.2% jump reported by TCS, each of them have reported traction across verticals. For Wipro, major verticals of banking, finance and insurance, communications, consumer, health, and manufacturing, which together form 75% of the revenue, grew by more than 3.5% sequentially in constant currency. Its active customer base expanded to 1,089 from 1,004 in the previous quarter. The operating margin (EBIT margin) improved by a tad 20 basis points to 19.2% from the quarter ago.
Wipro’s employee utilisation excluding trainees improved to 86.9% from 84.5% a quarter ago and 85% a year ago reflecting the recovery in operations. Attrition was at a multi-quarter low of 11% compared with 13% in the prior quarter and 17.6% a year ago. In addition, net headcount increased by 3,439 sequentially.
The company’s stock has gained 67% since the first quarter results on July 14, outperforming its top tier peers which have earned 30-52% return. While a further upside may be limited in the backdrop of such a steep rise, the downside will be curtailed due to the buyback offer at Rs 400 per share subject to approval. It is 6.4% higher than Tuesday's closing stock price of Rs 375.8.
In addition, after a brief lull in the previous two quarters, the country’s fourth largest IT company issued a quarterly guidance predicting up to 3.5% sequential jump in the dollar denominated revenue in the third quarter. This looks promising given that the growth is anticipated over the 3.7% topline increase it reported for the September quarter on a low base in the form of a sharp 7.3% drop in the March quarter.
While Wipro’s revenue growth in the September quarter looks lame in front of the 7.2% jump reported by TCS, each of them have reported traction across verticals. For Wipro, major verticals of banking, finance and insurance, communications, consumer, health, and manufacturing, which together form 75% of the revenue, grew by more than 3.5% sequentially in constant currency. Its active customer base expanded to 1,089 from 1,004 in the previous quarter. The operating margin (EBIT margin) improved by a tad 20 basis points to 19.2% from the quarter ago.
Wipro’s employee utilisation excluding trainees improved to 86.9% from 84.5% a quarter ago and 85% a year ago reflecting the recovery in operations. Attrition was at a multi-quarter low of 11% compared with 13% in the prior quarter and 17.6% a year ago. In addition, net headcount increased by 3,439 sequentially.
The company’s stock has gained 67% since the first quarter results on July 14, outperforming its top tier peers which have earned 30-52% return. While a further upside may be limited in the backdrop of such a steep rise, the downside will be curtailed due to the buyback offer at Rs 400 per share subject to approval. It is 6.4% higher than Tuesday's closing stock price of Rs 375.8.
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