Software-services major Wipro Ltd ended the first quarter of the current fiscal with a 12.6% jump in year-on-year profit, while quarter-on-quarter its net profit fell 3.9%.
The Bengaluru-based IT major’s profit during the June quarter stood at Rs 2,388 crore compared to Rs 2,121 crore in the same period last year. During the preceding March quarter it reported a profit of Rs 2,483 crore.
“Our efforts on client mining have resulted in an addition of three customers in the more than $100 million bucket,” said Abidali Z. Neemuchwala, CEO and executive director, Wipro. “We will continue to build differentiated capabilities to drive business transformation for our customers by investing in our big bets.”
Wipro’s revenue during the quarter under review stood at Rs 14,716 crore as against Rs 13,978 crore a year ago, up 5.3% year-on-year. However, revenue was lower than Rs 15,006 crore reported in the preceding March quarter.
“We delivered IT Services margins of 18.4% and free cash flows of 98.8% of our net income. We had a slower start to the year, we however remain focused on our operations and continue to invest in talent and capabilities for the future,” said Jatin Dalal, chief financial officer, Wipro.
For the second quarter ending September 30, 2019, Wipro expects its revenue from IT services to grow by upto 2% quarter-on-quarter.
Given the changing dynamics of the Indian IT landscape, top-tier software-services companies have ramped up their digital services offerings in areas such as artificial intelligence (AI), analytics, mobility, the Internet of Things (IoT) and cloud computing as clients push for more transformative services than just cost-savings outsourcing deals.
IT firms are focusing on building niche digital capabilities to boost their revenue growth, one of the biggest bets for the Indian IT outsourcing industry today. For Wipro, digital contributes about 37.4% of its total revenue.
“To lead in this time of rapid change we have sharpened our strategy…, we have been investing significantly in four areas: digital, cloud, engineering services and cyber security,” Azim H. Premji, executive chairman and managing director, Wipro Ltd said on Tuesday, in his last letter to shareholders.
“While we invest in new capabilities, we also strive to remain lean. For example, we divested our datacenter business in FY19. This has improved our return on capital employed,” said Premji. And added, “At Wipro, we have made significant investments in re-skilling our employees in digital technologies.”
Last month, Premji announced his retirement effective July 30. His son Rishad Premji, chief strategy officer and board member of Wipro, will take over as the executive chairman of the IT services firm while CEO Neemuchwala will be the new managing director. However, Azim Premji would continue to serve on the company’s board as a non-executive director and founder chairman.
Premji in his letter further pointed out that the board has approved a proposal to buyback equity shares of the company of upto Rs 10,500 crore and that the process would be completed by August 2019, subject to the approval of the Securities and Exchange Board of India.
Shares of Wipro Ltd closed at Rs 259.70 apiece, down 0.13% on the BSE on Wednesday, while the Sensex, ended the day marginally up by 0.22%.