Wipro Q4 net up 4%; operating margins under pressure as attrition rises

The Bengaluru-based company forecast a 1-3% growth for its IT services business for the ongoing quarter which began in April, and double-digit growth during FY23. It also estimated operating margin in the 17-17.5% range in the medium term.

The company’s net profit stood at Rs 3092.5 crore compared with Rs 2974.3 crore a year ago. Net profit grew 4% sequentially.

Total revenue grew 28.4% on year, and 3.1% sequentially, to Rs 20,860 crore. IT services segment revenue was at $2,721.7 million, meeting estimates. Wipro expects revenue from its IT services business to be in the $2,748 million to $2,803 million range in the ongoing quarter.

The average estimates of five brokerages polled by ET pegged revenue growth for the IT major at 28% on year. Four brokerages on average expected net profit to rise 2.8% on year.

“Crossing $10 billion revenue is a significant landmark for us. We have added just 1/4th of revenue just this year,” Thierry Delaporte, managing director of Wipro, said in a statement Friday. “Our order booking in annual contract value grew 30% YoY and we are finishing off the year with the highest-ever (deal) pipeline.”

The IT major closed 37 large deals resulting in a TCV (full form) of over $2.3 billion in FY22. The company added eight $100 million customers during the year and 10 customers in the $50 million range. The order book in the fourth quarter grew 38% on year in terms of annual contract value.

“We didn’t have a large deal of focus earlier. Over the past nine months, we have ramped up the engine with senior talent and a commercial finance model. This has already triggered the generation of new opportunities,” Delaporte said.

The company’s board has declared that the interim dividend of Rs 1 and Rs 5 declared on January 14 and March 25 will be considered as the final dividend for the financial year 2021-22.

For the financial year ended March, Wipro’s consolidated revenue rose 26.9% to Rs. 79,093 crore and net profit clocked Rs 12,243 crore, up 13.2%.

Shares of the company closed 2.5% lower. The results were declared after market hours.

Wipro’s results completes the line-up of top four IT companies announcing January-Mar results.

Last week, HCL Technologies’ fourth quarter net profit rose 23.9% to Rs 3,593 crore while revenue rose 15.1% to Rs 22,597 crore. Also, market leader Tata Consultancy Services posted a net profit growth of 7.4% on year at Rs 9,926 crore, and revenue of Rs 50,591 crore, up 15.8%. Infosys reported a net profit of Rs 5,686 crore, up 12% on year, with revenue rising 22.7% to Rs 32,276 crore.

All companies said that they weren’t as of now seeing any impact of the geopolitical tensions but were keeping a close watch. Their attrition numbers continued to be high, with TCS reporting attrition at 17.4%, Infosys at 27.7% and HCL Technologies at 21.9%.

Wipro’s attrition for the quarter was 23.8%, up from 22.7% last quarter and 12% last year. Headcount stood at 243,128, up 11,457 during the quarter. The company added over 19,000 freshers during the year and expects to double the number in FY23.

“I am pleased to report that in line with what we had shared last quarter, our quarterly annualized attrition has moderated by 500 basis points. We doubled our fresher intake in FY22 compared to FY21. Our plan is to double it again in FY23,” said Delaporte.

The company reported a 17% operating margin for the quarter, falling 60 basis points sequentially on account of wage hikes and currency-related headwinds.