Wipro Q2 results: Takeaways: Wipro’s sales growth guidance, Q2 margins to boost investor sentiments

MUMBAI: on Wednesday reported better-than-expected earnings for the quarter ended September despite the company’s consolidated net profit falling on a sequential basis.

The company’s consolidated net profit declined 9.6 per cent sequentially to Rs. 2,930.7 crore whereas its topline grew 7.7 per cent to Rs. 19,667 crore.

“The Q2 results demonstrate that our business strategy is working well,” said Thierry Delaporte, managing director and chief executive officer at Wipro in a press statement.

That said, here are the major takeaways from the Bengaluru-based company’s Q2 earnings:

Growth guidance may breed more optimism

After the earnings scare by Tata Consultancy Services on Friday, investors’ perception around IT stock became cautious. However, Wipro’s 8.1 per cent sequential topline growth in constant currency terms, ahead of its own guidance of 5-7 per cent, should boost sentiment.

Further, the company guided for 2-4 per cent sequential growth in revenues in the December quarter, which analysts interpreted as strong given the higher base of the current quarter.

Margin performance sturdy

Wipro managed to report a largely flat consolidated operating margin at 17.8 per cent for the reported quarter despite undertaking wage hikes.

The resilience in the margin front bodes well as it suggests that the management will be able to cope up with the rise in travel expenses in the coming quarters as the work environment returns to pre-pandemic normalcy.

Deal wins momentum sustaining

Wipro managed to add two more clients in the $100 million-plus bracket in the September quarter. The company also added two more clients in the $50 million-plus category and five more in the $20 million-plus bracket.

The healthy addition of large clients suggested that there is still considerable momentum when it comes to deal wins and the management also expressed its optimism for the deal pipeline going ahead. Delaporte said that recent additions to the large deals team should accelerate deal wins.

Attrition remains a headache

Attrition rate in the quarter ended September jumped to 2.5 per cent from 15.5 per cent despite wage hikes. The company is facing the same challenges that are causing troubles to its peers but has so far managed to navigate that without any impact on deal servicing. The company now plans to hire 25,000 workers in the next financial year.

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