Wipro Q4 net decelerates; co to buy back shares worth Rs 2,500 cr at Rs 625 a piece

Bengaluru - The country's third-largest IT firm Wipro on Wednesday reported a fall in profit for the fourth quarter ending 2015-16 but said is betting on digital and automation services to stem a decline in market share and double revenue over the next four years.

Its consolidated net profit dipped 1.6 percent to Rs 2,235 crore for the quarter ended March against a net profit of Rs 2,272 crore in the same quarter last fiscal, Wipro said in a filing to the BSE.

The company's revenue, however, rose 12.9 per cent to Rs 13,741.7 crore during the reported quarter, from Rs 12,171.4 crore in the year-ago period.

Azim Premji, chairman of Wipro Ltd Reuters

Azim Premji, chairman of Wipro Ltd Reuters

IT services revenue, which account for a lion's share of its turnover, stood at Rs 12,796.7 crore in the March quarter as against Rs 11,241.7 crore a year ago, showing a growth of 13.8 per cent.

For FY2015-16, its net profit increased 2.7 per cent to Rs 8,892.2 crore, while revenue grew 9.1 per cent to Rs 51,630.7 crore from last fiscal.

Its Board of Directors has approved a proposal to buyback up to 4 crore shares for around Rs 2,500 crore. This represents 1.62 per cent of the total paid-up capital at Rs 625 per equity share, it added. The buyback is proposed to be made from all existing shareholders of the company.

The company, in a statement, said its IT services revenue in constant currency terms was at USD 1,882 million, a sequential increase of 2.4 per cent and year-on-year increase of 6.1 per cent.

It expects its revenue from the IT services business to be in the range of USD 1.90-1.93 billion for the June 2016 quarter.

This would be an increase of 1-3 per cent quarter-on- quarter growth.

Abidali Neemuchwala, who took over the reins at India's third-largest software services exporter in February, told a post-earnings press conference that the company plans to boost revenue to $15 billion by fiscal 2020, from $7.7 billion in the 2015-16 financial year.

The revival plan, first outlined in an internal company memo in February, comes as Wipro grapples with shrinking margins and falling profits.

The city-based company has lagged larger domestic rivals Infosys and Tata Consultancy Services (TCS) in switching to high-margin digital services as tight competition has pressured fees for routine IT services. Both TCS and Infosys produced forecast-beating fourth-quarter earnings this month.

"Our focus is to drive significant growth in our 'run' business through integrated services and hyper-automation while gaining leadership in the 'change' business through investments in Digital and Consulting capabilities, IP-based platforms and products and creating differentiated domain solutions for non-linear growth," said Neemuchwala.

Wipro's IT services segment had a headcount of 1,72,912 as of March 31, 2016. It added 119 new customers during the quarter, including customers of Cellent and HealthPlan Services (companies acquired by Wipro).

"We have maintained our margins in the quarter, with benefits from utilisation and operational efficiencies largely off-setting the margin impact from our inorganic investments," Wipro CFO Jatin Dalal said.

He added that the company continues to generate robust cash flows during the year.

"The move to buyback equity shares is part of the company's policy to provide regular, stable and consistent return to investors while striving to enhance long-term value for all stakeholders," he said.

With Agencies

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Updated Date: Apr 21, 2016 11:01:39 IST

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