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Wipro Q2 profit up 0.9%, Q3 dollar revenue guidance disappoints

Software services provider Wipro has reported a 0.9 percent growth in consolidated profit at Rs 2,070.4 crore compared with Rs 2,051.9 crore in preceding period. Consolidated revenue (including IT products business) increased 1.5 percent to Rs 13,896.8 crore in Q2 from Rs 13,697.6 crore in Q1FY17. Revenue from IT services segment, which the street closely watch, declined 0.8 percent quarter-on-quarter to USD 1,916.3 million in the quarter ended September 2016 but grew by 0.9 percent in constant currency. "We delivered revenues in constant currency at the top end of guidance range," Abidali Z Neemuchwala, chief executive officer said in its filing. The company had expected dollar revenue at around USD 1,931-1,950 million for Q2. Wipro expects its revenues from IT services business to be in the range of USD 1,916-1,955 million for October-December quarter, a growth of 0-2 percent over September quarter. The above guidance was lower than analysts' expectations of 1-3 percent growth for the quarter. According to analysts polled by CNBC-TV18, revenue was expected at Rs 12,910 crore and dollar revenue at USD 1,923.5 million for the quarter. Operating profit margin from IT services business in Q2 remained unchanged at 17.8 percent on sequential basis, which was ahead of estimates of 17.04 percent, due to operational efficiency. "We maintained margins in Q2 despite the impact of salary increase for an incremental two months due to strong operational improvements in automation-led productivity, offshoring and utilisation," Jatin Dalal, chief financial officer said. Wipro on Thursday has signed a definitive agreement to acquire Appirio, a global cloud services company, for a purchase consideration of USD 500 million. The acquisition is expected to be closed by December 2016. "This acquisition will establish Wipro's dominance in cloud application services and further strengthen Wipro's brand as a digital partner of choice," Neemuchwala said. The scrip of Wipro, which announced earnings after market hours, closed 0.75 percent up at Rs 499.20 on the BSE.



Image Source moneycontrol.com

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