Wipro profit falls as lawsuit makes a dent

Bengaluru: Wipro Limited, promoted by billionaire Azim Premji, registered a 13.8 per cent decline in its net profit, which stood at Rs 1,885 crore for the quarter ended September 30, 2018, against Rs 2,189 crore it reported in the corresponding period a year ago.

The dent in profit was primarily due to payment of Rs 514.1 crore towards a settlement. In August this year, Wipro had said that it settled a lawsuit with National Grid US for $75 million.The revenue of the company stood at Rs 14, 541 crore for the second quarter (Q2), registering a growth of 8.3 per cent, compared to Q2FY18. Revenue from the company’s flagship business, IT services, stood at Rs 14,380 crore ($2,041.2 million), which met the upper end of the guidance. Wipro had guided the IT services business revenue in Q2FY19 to be in the $2,009-2,049 million range.

Commenting on the company’s performance, CEO and Board member Abidali Z Neemuchwala said, “We are very satisfied with a strong quarter of execution across both revenue and margins. The consistent improvement in our client metrics, operating metrics, order booking as well as the demand environment, gives me confidence that we will continue to build on this momentum.”

The adjusted IT services margin for Q2FY19 was 18.1 per cent, with the reported IT services margin being 14.6 per cent. The IT services margin includes settlement of the litigation and the adjusted IT services margin excludes its impact.As part of the new strategy for its India business, the company will carve out India Public Sector Undertaking and India government business.

Going forward, the company expects revenue from IT services business to be in the range of $2,028-2,068 million. The comparable revenue excluding India PSU and India government business for Q2 was $2,007 million. This translated to a sequential growth outlook of 1-3 per cent.  

“While our technology business has been doing well, we expect Q3 to be impacted by furloughs. In the health segment, we continue to see a challenge, driven by the uncertainty around ACA, which continues to persist,” said Neemuchwala.

New director

Wipro appointed ex-SBI chairman Arundhati Bhattacharya as a Board member for a period of five years from January 1, 2019, subject to approval from shareholders. She will serve as an independent director.