Wipro Q4 net up 38%; announces ₹10,500 crore buyback programme
IT services giant Wipro on April 16 said its net profit increased by 38.4%to ₹2,493.9 crore in the March 2019 quarter, and announced a ₹10,500 crore buyback programme.
The Bengaluru-based company had posted a net profit of ₹1,800.8 crore in the January-March 2018 period, Wipro CEO and executive ddirector Abidali Z Neemuchwala told reporters here.
Its revenue from operations — under IND AS accounting norms — grew 8.9%to ₹15,006.3 crore in the period under review from ₹13,768.6 crore in the year-ago period, he said.
“We have built a strong foundation for growth on the back of healthy order book and continued investments in big bet areas of digital, cyber security, engineering services and cloud. Our customers find these investments relevant as part of their digital transformation and IT Operations landscape modernisation, enabling us to win in the market,” he said.
The Wipro board, Neemuchwala said, had approved a ₹10,500 crore buyback plan under which it will acquire up to 32.3 crore shares at ₹325 apiece.
This is Wipro’s second buyback programme in about 15 months and the third since 2016.
It had undertaken a ₹2,500 crore programme in 2016, and another ₹11,000 crore buyback offer in November-December 2017.
Also read: Infosys Q4 net profit up 10.5% to touch ₹4,078 crore
The buyback was proposed to be made from the existing shareholders of the company through a tender offer route in accordance with the provisions, the CEO said.
As on March 31, 2019, promoters held 73.85% shares, while 6.49% was held by Indian financial institutions, banks and mutual funds. Foreign holding was at 11.74%, and that of Indian public, corporates and others at 7.92%.
The proposal is subject to approval of shareholders by way of a special resolution through a postal ballot.
The process, timelines and other requisite details with regard to the postal ballot will be communicated in due course, Wipro said.
On the company’s outlook, Neemuchwala said Q1 was seasonally a weak quarter for it, which is reflected in its guidance.
The outlook also factors completion of certain large programmes and delayed start of fresh projects, he said.
Hence, Wipro was confident that its growth trajectory will improve from Q2 on back of strong order book and healthy pipeline, Neemuchwala said.
Besides, the company was seeing continued momentum in BFSI, Consumer Business Unit and Energy Natural Resources and Utilities on a YoY basis in FY20.
He also said the company sees an uptick in growth rates of communications and tech business unit this year, while health and manufacturing are likely to remain choppy, especially in the first half.
“The demand environment in the global markets is stable and Wipro sees abundant opportunities in newer areas of digital and cloud,” he said.
Neemuchwala said the company’s revenues in Q4 grew by 1.4% in reported terms and 1.0% in constant currency terms, at the mid-point of its guidance range.
On a full year basis, it grew 5.4% in constant currency terms, he said adding through the year, the company had built on the momentum with YoY growth improving consistently each quarter.
Neemuchwala also said the company’s rigor in execution and focus on improved quality of revenues had resulted in operating margins expansion of 1.8% for the full year.
The operating metrics have shown consistent improvement with utilisation being at its highest, improved offshoring, higher percentage of work done by BOTS and moderation in its attrition rates, he said.
On strategic themes, Neemuchwala said Wipro’s digital revenue continues to see a strong growth as it grew 6.4% sequentially and now contributes 34.8% of its revenues.
He also said for the year, digital grew by 32.2% YoY.
On client mining, Neemuchwala said in Q4, the company’s top 10 customers continued to post a strong performance and added three new clients in USD 75 million plus revenue bucket.
On a full year basis, the company’s top 10 clients have grown by 9.6% in reported terms on YoY basis while its Net Promoter Score (NPS) improved by 510 basis points, he said.
Referring to automation, Neemuchwala said the company has deployed Wipro HOLMESTM in over 350 clients and the work done by BOTS in fixed price projects has improved from 6.7% in Q3 to 11.3% in Q4. Its fixed price mix has improved to 60%.
Neemuchwala said the company has significantly moved up the localisation ratios in all its major markets like US, UK, Australia, Canada, Singapore, Africa and the Middle East.
In the US, the company has reached new high of 64% up from 62.6% last quarter, he added.
He further said campus hiring from universities was playing a critical role across geographies along with training programmes, specially designed to get the university graduates move successfully into customer projects.
