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Wipro Q2 net profit up 3.7% sequentially to ₹2,659, but not so optimistic about Q3

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  • Wipro’s second quarter net profit grew 3.7% sequentially to ₹2,659 crore.
  • The IT company’s revenues grew 4.7% sequentially to 22,540 crore.
  • Wipro said it expects IT services revenue to grow 0.5-2% in the third quarter.

IT services provider Wipro today reported a 3.7% sequential increase in net profit in the second quarter to ₹2,659 crore, from 2,564 crore in the first quarter. While net profit recovered from a 17% decline reported in the first quarter, it is still below analysts’ expectations.

Operating income increased sequentially by 4.7% to 22,540 crore in the same period. The IT services business grew 4.1% sequentially in constant currency terms to $2.8 billion, slightly below expectations in the previous quarter.

“Our strong performance in the quarter is further proof that our strategy is delivering the intended results. The solid growth in our bookings, major deal signing and revenues underline our improved market competition and value proposition,” said Thierry Delaporte, CEO and General Manager of Wipro.

For the December quarter, Wipro expects IT services revenue to be in the range of $2.81-2.85 billion, translating to 0.5-2% sequential growth.

“As market conditions evolve, I believe our comprehensive portfolio of differentiated offerings positions us extremely well to meet the evolving needs of our customers and help them face the challenges of an uncertain macro environment with confidence,” said Delaporte. .

Wipro said its major deals were up 42% year-over-year in the first half of FY23.

Here’s Wipro’s Q2 FY23 at a glance:

Particularities Q2 FY23 Q1 FY23 Q2 FY22
Revenue ₹22,540 crores ₹21,529 crores ₹19,667 crore
Net profit ₹2,659 crore ₹2,564 crore ₹2,931 crore
Net margin 11.8% 11.9% 14.9%

Source: Company Reports

Wipro’s margins are under pressure and a falling rupee hasn’t helped the company’s profits enough. The company’s margins shrank on both a sequential and annual basis. This was also a problem for Wipro in the previous quarter.

“We achieved an (operating) margin of 15.1% in the second quarter after absorbing the impact of salary increases and promotions. Our margin improvement was driven by better price realizations and strong operational improvements in automation-led productivity,” said Jatin Dalal, Chief Financial Officer of Wipro.

For the quarter, employee wages were ₹13,726 crore, accounting for 60.9% of revenue, wages were 57.3% in the June quarter and 56.5% in the same quarter last year.

Wipro’s churn for the September quarter was 23% and continued to improve marginally each quarter. In context, turnover was 23.3% in the June quarter and 23.8% in the March quarter.

The company added just 605 new employees to its roster in Q2 FY23.

On a positive note, the company reported a recovery in its key geographies, with America’s key markets reporting double-digit earnings growth. Europe made a strong comeback after a 19% decline in the previous quarter.

The US region’s contribution rose from 74% in the previous quarter to 78% in the current quarter, further increasing Wipro’s reliance on this region.

Geography Q2 FY23 Results Change (QoQ)
America 1 ₹1,236 crores 12%
America 2 ₹1,422 crores 14%
Europe ₹788 crore 7%
APMEA ₹219 crore 37%
others -₹285 crores -352%

Source: Company Reports

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