Wipro resumes guidance; expects to clock 1.5-3.5% growth in Q3

Exceeding market expectations, Wipro's Q2 revenues came in at $1,992.4 million. The company also resumed providing quarterly guidance and has announced a buyback of up to Rs 9,500 crores

Bengaluru-based IT major Wipro registered a sequential constant currency growth of 2 per cent, with dollar revenue coming in at $1,992.4 million for the second quarter of FY21. The operating margins for the IT services saw an expansion of 20 basis points over the previous quarter coming at 19.2 per cent, which is a 1.1 per cent over year - on - year (YoY). Wipro also resumed its practice of providing quarterly revenue guidance (the company had not guided for Q2) and said it expects the revenue growth to be between 1.5 to 3.5 per cent or in the revenue range of $2,022 million to $2,062 million for the third quarter of the financial year. Thierry Delaporte, CEO and Managing Director termed it to be a broad-based growth with growth coming not only on the revenue front but also expansion of margin, lower employee turnover and a robust pick up in volumes. "Our stated guidance of Q3 of 21 despite seasonality of furloughs reflects this business momentum". Adding that from a sectoral perspective, "Consumer sector will grow fast on the back of solid deal wins. We remain optimistic on the financial service sector though it will be impacted by furloughs. Energy utilities & technology sector will return to growth in Q3 "said Thierry. While BFSI, Consumer business and communications verticals saw a marginal growth of 0.5 per cent, 0.3 per cent and 0.2 per cent sequentially, technology and energy and utilities continued to struggle.

The company, however, remains bullish on the demand environment, which it says has definitely improved from Q1, with the intensity of sales activity continuing to rise. The expansion in the operating margins was largely led by improvement in operation efficiency by bringing in 80 bps increase and was set off by 60 bps due to rupee appreciation. "Higher offshore mix, improved utilization, lower employee attrition and benefit of lower subcontracting helped in operational improvement," Thierry added. Bhanumurthy, COO, said the deal pipeline of Wipro was almost back to the pre-covid levels: "We see a good mix of large and small deals that are there. The sales activity intensity has increased and we are confident that we will have a fair share of the pipeline."

The company added a total of 13000 employees for the quarter and will be looking at rolling out increments to its junior employees in the coming quarter. "In Q2 itself we have paid 100 per cent variable to our employees. We have also gone ahead and committees promotions for 80 per cent of our people in Q3" said Saurabh Govil, CHRO of Wipro.

The company also announced a buyback of 9500 crores for the purchase of up to 237,500,000 equity shares or 4.l6 per cent of total paid-up equity share capital excluding taxes. Continuing its acquisition spree, Wipro said it had entered into a definitive agreement to acquire San Jose headquartered Eximius Design, an engineering services company with expertise in semiconductor, software and systems design for $80 million. The acquisition is expected to close by the end of third quarter.

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