Wipro Ltd cheered investors on Friday by announcing a bonus of one free share for every three they hold after posting fiscal third-quarter (Q3 2018-19) revenue growth that was in line with analysts’ estimates. However, a soft revenue outlook for the March quarter (Q4 2018-19), with the company expecting, at best, 2% growth in constant currency terms, tempered hopes of India’s fourth-largest information technology services company having turned the corner.
Wipro’s dollar revenue improved 1.8% sequentially to $2.04 billion in the quarter ended 31 December. Revenue grew 3.7% on a year-on-year basis. In constant currency terms, revenue rose 2.4% on a sequential basis.
Net profit totaled $366 million in Q3 compared to $260 million at the end of the September quarter (Q2 2018-19), as the firm made a $75 million payment in the second quarter to one of its customers to settle a lawsuit. Still, better operational efficiency helped the firm as the operating margin improved to 19.8%, compared to 18.1% in Q2.
A Bloomberg survey of 27 analysts had forecast revenue of $2.15 billion, or ?15,167.2 crore, in the December quarter. They forecast a profit of $327.72 million, or ?2,313.1 crore, in that period.
“I’m happy as it was another quarter of solid execution,” Wipro chief executive Abidali Neemuchwala said. “We do not see any immediate impact of the macro headwinds that some of the large economies have cautioned (about), but we continue to remain watchful,” Neemuchwala said.
Still, Neemuchwala, who took over as CEO in February 2016, refrained from commenting on whether Wipro will come back to industry-matching growth beginning April. He had earlier outlined a three-year roadmap for bringing the company to industry-matching growth.
Wipro’s revenue from clients in the banking and financial services industry (BFSI), which comprises 31.4% of its overall revenue, improved 4.7% sequentially in constant currency terms. US and Latin America, which account for 57% of business, grew 3.7%.
Compared with Wipro’s Q3 performance, Tata Consultancy Services Ltd (TCS) and Infosys Ltd reported 0.6% and 2.2% sequential dollar revenue growth, respectively. Infosys expects revenue to grow, at best, at 9% in constant currency terms this fiscal, while TCS will certainly grow more than 11%.
Wipro’s revenue growth, it appears, won’t be significantly higher than last year’s 2.9% rise on account of restructuring its business, which included carving out the India business.
“The performance in this quarter was in line with our estimate, though the company did better on profitability. However, guidance was a little lower than expectations,” said a Mumbai-based analyst at a domestic brokerage on condition of anonymity. “The company has given a bonus share. However, on account of a soft guidance and its current valuation of trading at 16 times, it should not surprise if the stock could see some correction on Monday,” said the analyst.
On Friday, Wipro shares rose 2.91% to ?346.2 apiece on the BSE while the benchmark Sensex closed unchanged at 36,386.61 points. Wipro Q3 results were issued after market hours.