Wipro Q3 Results: PAT rises 3% YoY to Rs 3,053 cr; co sees FY23 sales growing 11.5-12%

Wipro Limited on Friday reported 2.8% year-on-year (YoY) rise in consolidated net profit for the December quarter to Rs 3,053 crore, which topped ET Now poll of Rs 2,950 crore.

Consolidated revenue for the quarter increased 14.3% YoY to Rs 23,229 crore, and was tad higher than the estimated Rs 23,180 crore.

Sequentially, the topline rose a meagre 3%, but the bottomline increased by a sharp 15%. For FY23, Wipro expects revenue growth from the IT services business to be in the range of 11.5-12.0%, in constant currency terms.

Revenue from IT services increased 10.4% YoY for the quarter. Operating margin calculated as earnings before interest and taxes (EBIT) improved by a sharp 120 basis points sequentially to 16.3%.

“This expansion of margins was after absorbing the investments we made in our people by way of salary increases, promotions and long-term incentives for our senior leadership. Margin growth was led by strong operational improvements and automation-led efficiencies,” Chief Financial Officer Jatin Dalal said.

During the quarter, the company won deals worth $4.3 billion, up 26% YoY, with large deal bookings up by 69% YoY.

“We are continuing to gain market share as a result of deepening client relationships and higher win rates. Clients are turning to us to help them manage an evolving macro environment and balance their transformation goals with cost optimization,” CEO and Managing Director Thierry Delaporte said.

For the fourth quarter in a row, Wipro saw attrition rate trending lower. The voluntary attrition moderated 180 bps from the previous quarter to 21.2% for the trailing twelve months (TTM).

In the third quarter, revenue from the top 5 clients grew 15.7% YoY, and that from the top 10 clients grew 14.7% YoY in constant currency terms, underscoring Wipro’s deepening relationships with top strategic clients.

From a geography perspective, Americas 1 reported 1.1% growth sequentially, while Americas 2 saw a dip of 1.4%.

Wipro last year announced a new operating model. The Americas 2 Strategic Market Unit comprises financial services, manufacturing, energy & utilities and hi-tech industry sectors in both the US and Canada. The sector plays a crucial role in Wipro's overall growth strategy in North America and contributes over 31% to the company’s global revenue.

Americas 1 includes verticals such as healthcare and medical devices, consumer goods and lifesciences, retail, transportation and services, communication, and media and covers Latin America.

The dip in revenue in Americas 2 suggests the likely slowdown that Wipro is seeing in the major banking and financial services and hi-tech sectors.

Peers Tata Consultancy Services and Infosys had pointed out some cautiousness in these segments among clients.

Americas 1 contributed 29.4% to the total revenue in the December quarter, while Americas 2 made for 30.8%. Europe contributed 28.8% to the overall revenue.

The net utilisation rate at Wipro dipped marginally from the previous quarter to 79.7%. It was as high as 83.8% in the first quarter of the current financial year. The company has announced a dividend of Re 1.