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Wipro Q4 net profit falls; new CEO flags uncertainty in macro environment

Source: PTI
April 19, 2024 19:40 IST
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IT service company Wipro on Friday reported 7.8 per cent year-on-year decline in its consolidated net profit for the March quarter to about Rs 2834.6 crore, and cautioned that the macroeconomic environment remains "uncertain".


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The Bengaluru-headquartered company, which recently saw a change of guard with Srinivas Pallia taking over at the helm as the new chief executive officer, has given an IT Services revenue growth guidance in the (-)1.5 per cent to +0.5 per cent band for June quarter on a constant currency basis.


Pallia asserted that the immediate priority for the company is to "accelerate growth" as he spelt out clear focus areas for the IT services firm, which has been lagging peers on performance and operational metrics quarter-after-quarter.

For the Q4FY24, Wipro's revenue from operations slipped 4.2 per cent on-year to Rs 22,208.3 crore.

The net profit (attributable to equity holders of the company) declined to Rs 2,834.6 crore in Q4FY24 from Rs 3074.5 crore in the year ago period, translating into a 7.8 per cent fall, according to BSE filing.

"We expect revenue from our IT Services business segment to be in the range of $2,617 million to $2,670 million. This translates to sequential guidance of (-)1.5 per cent to +0.5 per cent in constant currency terms," the company said in its forecast for Q1FY25.

For the full year FY24, the revenue from operations came in at Rs 89,760.3 crore, almost 0.8 per cent lower than the previous fiscal.

The net profit fell to Rs 11045.2 crore, down 2.6 per cent over previous fiscal.

The Board approved the re-appointment of Rishad A. Premji as executive chairman for a period of five years with effect from July 31, 2024 to July 30, 2029.

It also green signalled re-appointment of Azim H. Premji as non-executive, non independent director for a period of 5 years with effect from July 31, 2024 to July 30, 2029, according to a statutory filing.

In the earnings briefing, Pallia acknowledged that FY24 proved to be a challenging year for the industry and added "the macroeconomic environment remains uncertain".

The newly-appointed CEO cautioned that "there may be more challenges in the short term".

"Last year posed big challenges for the whole industry, it has affected Wipro's performance too.

"The economic environment is still uncertain, and there might be more challenges in the short term.

"However, he said, the opportunities are limitless," he said during his first earnings conference at the helm of Wipro, after he took over the baton from Delaporte at the $11 billion IT services firm.

Pallia said he is optimistic about the opportunities that lie ahead.

"We are on the brink of a major technological shift.

"Artificial intelligence is transforming our clients' needs as they seek to harness its power for competitive advantage and enhanced business value.

"At Wipro, we have been gearing up for this moment," he said adding Wipro has the capabilities, leadership, and strength of over 230,000 Wiproites around the world to help the company realise its goals.

"Although there's a considerable amount of work ahead of us, I am confident that together, with our collective effort, we can pave the way for the next chapter of growth," he said.

Aparna Iyer, chief financial officer, said, "Despite a challenging macro-environment our IT services margin expanded by 50 basis points for the full year FY24.

"We generated highest operating cash flow in recent years which is at 183 per cent of our net- income in Q4 and 159 per cent on a full year basis."

Wipro's headcount fell to 234,054 as on March 2024, 9.1 per cent lower than the year-ago period.

Pallia outlined focus areas for the company that includes accelerating large deal momentum, and strengthening relationship with large clients and partners, amongst others.

On Thursday Infosys - India's second-largest IT services company disappointed with its forecast of a 1-3 per cent annual revenue growth for FY25, raising concerns that the global macroeconomic uncertainty continues to weigh in on client decisions and discretionary spends.

Infosys' weak, somewhat realistic, guidance dragged down its US-listed shares, as analysts wondered if the global cues could push recovery to the second half of the fiscal, for the $254 billion Indian IT industry.

Sanjeev Hota, head of research, Sharekhan by BNP Paribas said while the revenue was in line with its estimates, the revenue growth guidance of -1.5-0.5 per cent for Q1FY25 was lower than expectations and "reflects continuing pressure in the near term".

"Headcount continued to decline for the sixth consecutive quarter...The quarterly numbers are a mixed bag, however, weaker than expected guidance continues to disappoint.

"Further the recent sudden change of CEO  brings about additional element of uncertainty in the near term before potential turnaround in the medium to longer term," Hota said.

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