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Wipro net profit grows marginally, co unveils bonus issue

Source: PTI
April 25, 2017 23:05 IST
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The Bengaluru-based Wipro on Tuesday registered a marginal rise in net profit for the March quarter and offered a muted outlook, but sought to cheer investors by announcing a bonus issue and a likely share buyback.

India’s third-largest software services firm said it will issue bonus shares within the next two months, a move aimed at encouraging participation of small investors, enhancing liquidity and expanding retail shareholder base.

However, market watchers were disappointed with the outlook of a flat sequential growth for the June quarter.

This could spell further trouble for Indian IT firms as they face challenging times ahead in the form of visa curbs in their largest market -- the US -- as well as tightening of work permit norms by other nations.

Wipro registered a negligible rise in the consolidated profit at Rs 2,267 crore for the fourth quarter ended March 2017. The total income rose over 5 per cent to Rs 15,033.8 crore in the said quarter, compared to the year-ago period.

The IT firm attributed the muted guidance to softness in healthcare and retail business. Wipro expects revenues from its IT services -- its mainstay -- to be in the range of $1,915-1,955 million for the April-June 2017 quarter.

This is almost similar to March quarter IT services revenue that stood at $1,954.6 million. The dollar revenue was 3.9 per cent higher than the year-ago period.

“The guidance that we give at the beginning of the quarter is what we see. We have had certain project cancellations in our healthcare business which will have impact in Q1 (first quarter),” Wipro CFO Jatin Dalal said.

He further said there was similar ‘softness’ in the retail sector.

For the full 2016-17, Wipro's profit fell nearly 5 per cent to Rs 8,518 crore while total income grew 7.4 per cent to Rs 57,995 crore compared to the previous fiscal.

The results were announced after the close of trading hours. Shares of the company closed marginally up at Rs 494.55 on the BSE.

“The fourth quarter of 2016-17 results better than expected... For the first quarter of 2017-18, the company has guided for $1,915-1,955 million... which indicates a dim outlook for Q1 2017-18,” said Sarabjit Kour Nangra, V-P (Research-IT), Angel Broking.

The conglomerate said it will offer one bonus share for every one equity held (including American Depository Shares). It will also explore share buyback option around July.

“...the issuance of bonus shares was not part of the agenda papers for the board meeting,” it stated.

Bigger rivals TCS and Infosys have already announced mega share buybacks to offer rich returns to shareholders.

Wipro CEO Abidali Z Neemuchwala said the company has stepped up efforts to hire more locals and set up delivery centres in the US to ensure continuity of service for clients.

Locals will constitute more than half of Wipro’s workforce in the US by June, he added.

In the news recently for handing out pink slips to hundreds of employees, Wipro maintained that hiring is going on as planned on the campuses.

The company said it is recruiting people for newer technologies as and when required.

Wipro had over 1.65 lakh employees under the IT services with voluntary attrition at 16.3 per cent at the end of March.

It has seen strong cash generation during the year, despite the volatility in the currency environment, exuding confidence in recovery of the energy and utilities vertical.

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