Wipro sees strong demand environment in global markets

Unfazed by double-digit decline in annual and quarterly net profit and posting lower growth than rival HCL Technologies in revenue, software major Wipro on Wednesday sounded upbeat on demand environment being strong in global markets for its IT services.

“Demand environment and traction in global markets continues to be strong, especially for digital transformation and enterprise scale modernisation services,” Wipro Chief Executive Abidali Neemuchwala told reporters here.

Noting that the pickup in growth across industry segments continued in the US, where about 60 per cent of the IT majora¿s revenue is generated, Neemuchwala said the momentum was also better in Asia Pacific and emerging markets, which grew 7.9 per cent sequentially in the second quarter.

“We are seeing good momentum in our global business led by steady performance in the BFSI (banking, financial services and insurance) and consumer business and revival in the ENU (energy, natural resources and utilities) segment,” asserted Neemuchwala on the occasion.

Unlike peers TCS, Infosys and HCL, city-based Wipro reported 14 per cent and 10 per cent annual and quarterly decline in net profit for the second quarter of this fiscal (2018-19).

Wipro’s annual and quarterly revenue growth in single digit was lower than the peers for the quarter (Q2) under review, resulting in the Noida-based HCL overtaking it for the third slot after TCS and Infosys in performance.

“Other companies focus on market segments which determines their strategy. We feel confident about the path we have taken in the long-term interest of our customers. In the areas we operate, our goal is leadership,” said the CEO on HCL upstaging Wipro in top line and bottom line growth.

The company is also seeing an uptick in its communications business driven by core enterprise spends and next-gen technologies like 5G.

“Though our technology business has been doing well, we expect the third quarter (October-December) to be impacted by furloughs,” Neemuchwala said.

Furloughs refers to long year-end holidays due to Christmas and New Year.

“In the health vertical, we continue to see a challenge, driven by the uncertainty around ACA (Affordable Care Act) as it persists in the US,” he pointed out.

The outsourcing firm also clinched its largest deal valued at $1.5 billion from the US-based Alight Solutions LLC during the quarter under review.

The net utilisation, excluding trainees was 85.5 per cent in Q2.

Digital business grew 13 per cent sequentially, contributing 31 per cent of the company’s quarterly revenue. Our focus on client mining is paying off well, as evident from 3.6 per cent sequential growth by its top 10 clients.

On the company’s non-operating income not benefitting from a weak rupee despite hedging against a strong dollar, company Chief Financial Officer Jatin Dalal told IANS that the bottom line (net income) was impacted by one-time settlement with an unspecified key customer.

The company’s operating margin for the quarter was impacted by a loss of Rs 514 crore from the settlement with one of its unspecified key customers.

“Our earnings per share declined 7.5 per cent due to the settlement,” admitted Dalal./Eom/510 words.