GuruFocus -
- IT Services Revenue: $2.63 billion, sequential growth of 0.1%, year-on-year de-growth of 0.7%.
- Total (EPA:TTEF) Contract Value (TCV): $3.5 billion in bookings.
- Operating Margins: 17.5%, an expansion of 0.7% quarter-on-quarter and 1.5% year-on-year.
- Capco Business Revenue Growth: 11% year-on-year.
- Americas 1 Revenue Growth: 3.9% sequentially, 3.7% year-on-year.
- Americas 2 Revenue Growth: De-growth of 0.6% sequentially, growth of 1.2% year-on-year.
- Europe Revenue Growth: De-growth of 2.7% sequentially, 4.6% year-on-year.
- APMEA Revenue Growth: De-growth of 2.1% sequentially, 8% year-on-year.
- Health Sector Revenue Growth: 6.7% sequentially, 4.5% year-on-year.
- BFSI Sector Revenue Growth: De-growth of 1.9% quarter-on-quarter, growth of 3.4% year-on-year.
- Consumer Sector Revenue Growth: De-growth of 0.9% quarter-on-quarter, growth of 0.4% year-on-year.
- Energy Manufacturing and Resources Revenue Growth: 0.4% quarter-on-quarter, decline of 8.7% year-on-year.
- Technology and Communications Revenue Growth: De-growth of 0.6% quarter-on-quarter, 5.3% year-on-year.
- Net Income and EPS Growth: 24% year-on-year, 5% sequentially.
- Dividend: Interim dividend of INR 6 per share.
- Guidance for Q4: Sequential growth of -1% to +1% in constant currency terms, revenue range of $2.602 billion to $2.655 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wipro Ltd (NS:WIPR) (NYSE:WIT) achieved a 12-quarter high operating margin of 17.5%, marking an expansion of 0.7% quarter on quarter and 1.5% year on year.
- The company closed 17 large deals with a total value of $1 billion, showcasing strong deal momentum.
- Wipro Ltd (NYSE:WIT) reported a year-on-year growth in three out of five industry sectors, with health sector growing 6.7% sequentially and 4.5% year on year.
- The company's Capco business saw improved demand, with order book growing by 9% year on year and revenue increasing by 11% year on year.
- Wipro Ltd (NYSE:WIT) has increased its dividend payout, with the Board approving a higher payout percentage of 70% or above of net income cumulatively over a three-year period starting FY26.
- IT services revenue showed a sequential growth of only 0.1% and a year-on-year decline of 0.7%, indicating sluggish revenue growth.
- Europe and APMEA regions remained soft, with Europe de-growing 2.7% sequentially and 4.6% year on year, and APMEA de-growing 2.1% sequentially and 8% year on year.
- The BFSI sector experienced a quarter-on-quarter decline of 1.9%, despite a year-on-year growth of 3.4%.
- Guidance for the next quarter indicates a potential decline, with expected sequential growth ranging from minus 1% to plus 1%.
- The company continues to face challenges in the energy manufacturing and resources sector, which declined 8.7% year on year.
A: Srini Pallia, CEO, explained that the large deal pipeline is robust, especially in BFSI and EMR segments. While large deals are lumpy, the company is seeing positive signs in discretionary spending in the Americas, which could help achieve higher growth rates.
Q: What are the levers used to expand margins despite wage hikes, and what is the target margin band?
A: Aparna Iyer, CFO, mentioned that margin expansion was achieved through improved execution, utilization, offshoring, and overhead reduction. The current target is to maintain margins in a narrow band around 17.5%.
Q: Why is the Q4 guidance flattish despite positive factors like the absence of furloughs?
A: Aparna Iyer stated that the guidance is based on current visibility, reflecting a gradual recovery. While some sectors like BFSI and healthcare are doing well, others like EMR and consumer need to recover.
Q: What are the portfolio interventions in areas with weak growth like EMR and APMEA?
A: Srini Pallia highlighted leadership changes and a refined go-to-market strategy in APMEA and Europe. The focus is on rebuilding the pipeline and improving deal conversion to drive growth.
Q: How is Wipro (NYSE:WIT) preparing to capitalize on opportunities outside the top 10 clients?
A: Aparna Iyer emphasized that hunting and mining remain key priorities. The company is focused on winning new accounts and improving client engagement to drive growth beyond the top 10 clients.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.