The net profit of Wipro missed Street estimates for the second quarter ended September 30 even as revenues declined for the third straight quarter amid a weak environment marked by lower discretionary spending by clients following high inflation and elevated interest rates, globally.
The company posted a consolidated net profit of Rs 2,667.3 crore in the second quarter compared with Rs 2,649 crore in the corresponding period of the previous year. Analysts had forecast a net profit of around Rs 2,900 crore.
Revenues declined to Rs 22,516 crore from nearly Rs 22,540 crore a year ago, against expectations of Rs 22,800 crore.
The Bangalore-based company on Wednesday also announced the merger of five arms with itself: Wipro HR Services India Private Ltd, Wipro Overseas IT Services Pvt Ltd, Wipro Technology Product Services Pvt Ltd (formerly known as Encore Theme Technologies Pvt Ltd), Wipro Trademarks Holding Ltd and Wipro VLSI Design Services India Pvt Ltd were brought under one roof.
Wipro said the proposed amalgamation is meant to consolidate business operations, reduce overheads including administrative, managerial and other expenditures apart from ensuring an optimised legal entity structure.
The company also hopes to reduce the multiplicity of legal and regulatory compliances.
Wipro’s peers TCS and Infosys have also reported disappointing numbers that were paradoxically accompanied by large deal wins.
Thierry Delaporte, CEO and MD, said: “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, optimisation of existing investments and faster return on new ones. The lower discretionary spend is a reality today.”
“Transformation programmes nearing their project terms are being replaced by new ones but at a slower place.”
He said making the right investments and working on an efficient model are the key to future success as Wipro will be ready when there is a turnaround.
“We ended the second quarter with 22 accounts above the $100 million range, which is double the number we had in 2020-21. Our large deal total contract value reached $1.3 billion — the highest in the last nine quarters.’’
The guidance on IT services revenue was also weak: it earned $2.71 billion in the second quarter and expects revenue will be in the range of $ 2.61-2.6 billion which translates to sequential guidance of -3.5 per cent to -1.5 per cent in constant currency terms.
The reduction in the employee count was another disappointment. It fell to 2.44 lakh from 2.29 lakh in the preceding quarter.
