Software-services company Wipro on Wednesday posted a 6.3% year-on-year drop in its consolidated net profit for the fourth quarter ended March 2020, while quarter-on-quarter profit fell 5.3% as the Covid-19 pandemic disrupts businesses of its clients across sectors and geographies.
The Bengaluru-based IT firm reported a profit of ₹2,326.1 crore for the March quarter compared to ₹2,483.5 crore a year ago. For the preceding December quarter Wipro’s profit stood at ₹2,455.9 crore. For the quarter under review, the company’s revenue from operations was up 4.7% at ₹15,711 crore as against ₹ 15,006.3 crore in the year-ago period.
In dollar terms, Wipro’s IT services revenue stood at $2,073.7 million, a decline of 1% quarter-on-quarter while IT services operating margin for the March quarter was recorded at 17.6%, down 0.8% sequentially.
Wipro said that the IT services revenue for the March quarter were negatively impacted by the Covid-19 pandemic by approximately $14 million-$16 million (about 0.7%-0.8% of its revenue).
“Due to the uncertainty around the course of the Covid-19 pandemic, we do not have visibility into the extent to which it will disrupt our operations, and we have decided to not provide revenue guidance for the quarter ending June 30, 2020,” the IT firm said in a statement, adding, “We will resume providing revenue guidance when we have increased certainty of both demand and supply side factors.”
“The company has not given any guidance for the first quarter of FY21 due to global uncertainty. The impact of Covid-19 in Q4 (FY20) was around $14 million-16 million. Taking similar run-rate, we expect about 3%-4% quarter on quarter fall in Q1 (FY21) revenue,” said Amit Chandra, analyst at HDFC Securities.
Abidali Z. Neemuchwala, CEO and managing director, Wipro, said, “In these unprecedented times, I am extremely proud of how the Wipro team has come together and worked 24/7 to ensure the safety and well-being of each other while continuing to serve our clients. We hope that all of us stay safe and strong during these tough times. We are confident that our broad portfolio of services and our ability to execute to our commitments makes us well-positioned to gain market share.”
In January this year, Neemuchwala decided to step down due to family commitments. Wipro has initiated a search to identify the next CEO, while Neemuchwala will continue to hold the office until a successor is appointed. However, the IT firm did not share any update on the CEO search while announcing the earnings.
“The quarters ahead seem challenging and require a tremendous response on costs. We also anticipate our working capital to increase, but our strong balance sheet provides us the confidence that we will emerge stronger and better. Further, due to the volatility in the external environment, we have decided not to provide a quarterly guidance on revenues,” said Jatin Dalal, chief financial officer, Wipro.
“Banking, financial services and insurance (BFSI) growth slowed down further led by issues in large European banks, U.S. Capital markets and Covid-19 impact. Within services, highest impact was in BPO, down 5.3% quarter on quarter,” said Chandra, adding that, “Cash conversion was poor due to increase in working capital related to Covid-19”.
The board has not recommended any final dividend. The interim dividend of ₹1 declared by the board in January this year shall be considered as the final dividend for the financial year 2019-20.
Shares of Wipro closed at ₹186.55 a piece, down 1.53% on the BSE on Wednesday, while the Sensex ended the day down by 1.01%.