PremiumIT major Wipro Ltd announced its financial results for the third quarter ended December 2022 of the current fiscal or Q3 FY23 on Friday. The Q3 was broadly stable with consolidated PAT witnessing double-digit growth sequentially, while revenue also picked up. Wipro's attrition rate moderated furthermore. The company has declared an interim dividend of ₹1 per equity share.
During Q3FY23, Wipro posted 9.6% YoY growth in the financial services business. While the growth was highest in the consumer business unit to the tune of 16.8% YoY followed by the manufacturing business with 14.4% YoY growth. The energy business garnered 10.1% YoY growth, while healthcare and technology posted 8.9% and 4% year-on-year growth.
Veer Trivedi, Research Analyst, SAMCO Securities said:
Wipro reported slightly disappointing results when it comes to its top line. The company’s QoQ revenue growth at 3.1% was a little subdued. Further, the revenue growth guidance for Q4 in constant currency (CC) terms is seen at -0.6% to 1% QoQ. On a full-year basis, it will likely underperform its peers. Top-line aside, the company did put a good show in its operating metrics, the margins improved 120 basis points QoQ and are expected to improve further too. The deal wins like its other leading peers were strong. Thus all-in-all, a slight miss on the top line & a good show on its margins and profitability.
Wipro expects Revenue from its IT Services business for the full year to be in the range of 11.5% to 12% in constant currency terms.
Wipro has declared an interim dividend of Re 1 per equity share having a par value of ₹2 each to the members of the company.
For the dividend benefit, the company has set January 25 as the record date for determining eligible shareholders.
The payment of the interim dividend will be made on or before February 10, 2023.
Wipro has reduced its workforce during the third quarter of FY23. The company's total headcount is 258,744 as of December 31, 2022, lower by 435 employees compared to the total count of 259,179 employees witnessed in September 2022 quarter. During Q1 of FY23, the headcount was around 258,574.
However, year-on-year, Wipro's employees headcount has increased by 27,073 from 231,671 count recorded in December 2021 quarter.
In Q3FY23, the company's attrition rate moderated sharply by 180 basis points sequentially to 21.2% for the trailing twelve months for the quarter.
Wipro's attrition rate was at 23% in the September 2022 quarter, while it was at 23.3% during June 2022 quarter.
Thierry Delaporte, CEO and Managing Director, said, “I am pleased to report that we have delivered another quarter of double-digit revenue growth. Our Total Bookings were over $4.3 billion, led by solid large deal signings of over $1 billion. We improved our margins by 120 basis points and our attrition moderated for the fourth quarter in a row."
CEO further added, "We are continuing to gain market share as a result of deepening client relationships and higher win rates. Clients are turning to us to help them manage an evolving macro environment and balance their transformation goals with cost optimization. Our ability to deliver on client objectives regardless of where they are in their cloud journeys is positioning us favourably in a consolidating market."
"As we move ahead, we expect to continue to benefit from these trends and help clients build future-proof, resilient enterprises," CEO added.
Wipro garnered a 26% growth YoY in total bookings during Q3FY23. While the company's large deal bookings climbed by 69% YoY.
Wipro's top 5 clients grew 15.7% YoY and its top 10 clients grew 14.7% YoY in constant currency terms, underscoring deepening relationships with top strategic clients.
Wipro's IT services operating margin during Q3 stood at 16.3% -- expanding by 120 basis points quarter-on-quarter.
Jatin Dalal, Chief Financial Officer, said, “Our Operating margins are now at 16.3%, which is an expansion of 120 basis points from last quarter. This expansion of margins was after absorbing the investments we made in our people by way of salary increases, promotions, and long-term incentives for our senior leadership. Margin growth was led by strong operational improvements and automation-led efficiencies."
Wipro's IT services segment revenues recorded an improvement of 6.2% YoY to $2,803.5 million. Non-GAAP constant currency IT services segment revenues witnessed an upside of 0.6% QoQ and 10.4% YoY.
Consolidated revenue from operations came in at ₹23,229 crore in Q3FY23 compared to ₹20,313.6 crore in Q3 of the previous fiscal, registering a growth of 14.35% YoY. However, Wipro's revenue growth was at 3.06% QoQ.
Wipro has announced its December 2022 quarterly results. On a consolidated basis, the company posted a PAT of ₹3,052.9 crore in Q3FY23 up by 2.8% from a profit of ₹2,972.3 crore in Q3 of FY22. Sequentially, the company's PAT rose by 15.24% from ₹2,649.1 crore in September 2022 quarter.
ICICI Direct expects the company's IT services EBIT margins to expand moderately by 10 bps QoQ as there would be some wage hike impact to hit in Q3 with tailwinds being moderation of attrition, pyramid optimisation, and rupee depreciation.
However, EBITDA is factored at ₹4,278.1 crore marginally down by 0.6% YoY but up by 5.8% QoQ.
ICICI Direct expects Wipro's revenue to be at ₹23,403.8 crore up by 14.5% YoY and 3.3% QoQ.
On the top-line front, the brokerage in its research note said, Wipro had given 0.5-2% QoQ CC growth guidance for Q3. Due to the higher furlough impact this year, we bake in revenue growth at the lower end. The company is expected to report 1% QoQ CC revenue growth in Q3 while dollar revenue growth is expected to be 0.7% QoQ, after factoring in 30 bps cross currency headwinds.
During Q2FY23, Wipro posted a consolidated net profit of ₹2,659 crore in Q2FY23 down by 9.27% yoy but higher by 3.72% qoq. Meanwhile, its consolidated revenue came in at ₹22,540 crore higher by 14.6% yoy.
In Q2, Wipro's IT services segment revenues were at $2,797.7 million, an increase of 8.4% yoy. Also, non-GAAP constant currency IT Services segment revenue increased by 4.1% qoq and 12.9% yoy. Notably, Wipro's IT services operating margin for the quarter stood at 15.1% expanding by 16 basis points sequentially.
Ahead of its Q3 results announcement, shares of Wipro were trading marginally lower at ₹393 apiece on the BSE on Friday
Wipro is set to announce its earnings for the third quarter ended December 2022 of the current fiscal or Q3 FY23 on Friday
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