Wipro Q1 net rises 36% YoY, surpasses its own June qtr revenue guidance

The company's revenue guidance or Q2FY22 ranges between $2,535 million to $2,583 million, representing a growth of 5-7 per cent

Wipro surpassed its revenue guidance for the first quarter (Q1), which it hailed as its best ever, as it reported a 35.7 per cent year-on-year (YoY) incr­ease in consolidated net profit.

This performance was aided by acceleration in demand thanks to the cloud and digital transformation, and supported by the company’s new business strategy. Net profit grew to Rs 3,243 crore, and was up 9.1 per cent sequentially. Revenue grew 22.3 per cent YoY to Rs 18,525 crore and was up 12.4 per cent sequentially.

In US dollar terms, the company reported revenue of $2.4 billion, a growth of 12 per cent sequentially in constant currency terms. This is much ahead of the Street’s expectation of 10 per cent sequential growth. The company said that of this 12 per cent growth, 4.9 per cent was organic and the rest from Capco. However, the company’s margins declined by more than 200 basis points (bps) to 18.8 per cent.

Lauding the company’s performance, Chief Executive Officer and Managing Director Thierry Delaporte said: “Despite the severe onslaught of the pandemic, we delivered our best-ever quarter, with secular growth across all SMUs, sectors and GBLs. Our sequential revenue growth of 12.2 per cent was well ahead of the top end of our guidance range, both organically and with Capco.”

The company’s revenue guidance for Q2 financial year 2021-22 (FY22) ranges between $2.54 billion and $2.58 billion, representing a growth of 5-7 per cent.

Speaking on the Q2 guidance, Delaporte said, “If you look at the guidance for the second quarter and what we have done in Q1, we see the company delivering double-digit growth for the fiscal”.  He added that growth was broad-based with all verticals and geographies reporting double-digit growth.

Aided by the acquisition of Capco, Wipro surpassed larger peers like TCS and Infosys on growth and profitability on a sequential basis. 

While Wipro clocked in 12 per cent sequential revenue growth in constant currency, Infosys reported 4.8 per cent growth, and TCS 2.7 per cent.

Analysts cheer

Analysts were positive on the Wipro stock after the results, given the guidance it provided for the second quarter.

A note issued by ICICI Direct Research said: “Wipro reported healthy set of Q1 numbers. We believe the company has reported robust organic revenue growth of 6 per cent and has given strong guidance of 5-7 per cent QoQ in Q2FY22E. This coupled with healthy deal wins prompt us to be positive on the stock. We would be revisiting our estimates and target price post the conference call.”

Sanjeev Hota, head of research at Sharekhan by BNP Paribas, said the IT Ebit (earnings before interest and taxes) missed estimates. 

“Company provided strong revenue growth guidance... for Q2, in line with our expectations. The company closed 8 large deals with a TCV of over $715 million, down 49% [sequentially]. Strong demand environment, return of multi-quarter highest organic growth, improving deal pipeline, record-high hiring, client additions and healthy deal wins are expected to drive revenue growth in coming years. We have ‘Buy’ rating on Wipro.” As with its peers, Wipro saw attrition rise in the quarter to 15.5 per cent.