Wipro Q2 net profit flat, projects up to 3.5% fall in revenue

IT services company Wipro on Wednesday reported a flat consolidated net profit at Rs 2,667.3 crore for the September quarter, trailing street expectations. The company's revenue from IT services business is expected to contract 3.5 per cent to 1.5 per cent in constant currency terms, the company said, outlining its sequential guidance as Wipro CEO Thierry Delaporte flagged the prevailing uncertainty in business environment, lower discretionary spends, and acknowledged that conversion of order books has indeed become slower.

Business Environment Uncertain, Says CEO

For the last three quarters, the company is in a different market and that is a fact, Delaporte said, asserting that Wipro is keen that when the market rebounds, it is ready and agile.The business environment has been uncertain, inflation and interest rates have stayed high. Clients are continuing to take a much more rigorous look at their investments, they are hyper-focused on efficiency, on optimisation of existing investment and faster return on new ones, Delaporte said during Q2 earnings briefing.

IT Services Revenue Declines

The IT services revenue declined to Rs 22,395.8 crore in the September quarter from Rs 22,520.5 crore in the year-ago period.Wipro business from top contributing verticals, including banking, financial services and insurance, manufacturing, and consumer declined.

Margins Steady, Says CEO

Transformation programmes that are nearing their project terms are being replaced by new ones but at a slower place... all of it has impacted topline growth as well... But even though there is some softness in topline growth, we are holding margins steady, he observed.

Europe Demand Slowing

Europe, which has been a growth engine for Wipro over the last two years, saw slowing demand and re-prioritisation of client spends resulting in revenue decline of 5 per cent on a sequential basis.

Restructuring Proposals Approved

The Wipro board also approved restructuring proposals of the company to consolidate business operations, optimise legal entity structure, reduce multiplicity of legal and regulatory compliances.Wipro's Q2 results were a mixed bag, with a flat net profit and a marginal decline in revenue. The company's IT services business is expected to contract in the current quarter, but CEO Thierry Delaporte expressed hope that there will be a rebound in the next few quarters. Despite the challenging environment, Wipro is continuing to invest in people and technology, and is confident of a swift rebound when the market recovers.