Wipro Q3 result meets street expectations, net profit up by 1.8 per cent

India's third largest software service firm Wipro Ltd. announced its nine month ending quarterly results on Monday before market hours. The company revenue is largely in line with the expectation for quarter with the company taking a one-time hit from the recent Chennai floods. The operating revenue of company in Q3FY16 increased by 7.16 per cent year on year (YoY) to Rs 12952 crores, and net profit increased by 1.88 per cent YoY to Rs 2234 crores.

Commenting on the result the Chief Executive Officer (CEO) of Wipro T K Kurien said– “We delivered Revenues in line with our guidance. We saw a pick-up in large deal closures led by Global Infrastructure Services. It is becoming increasingly clear that customers want to simplify operations and optimize their IT spending while investing in Digital to transform their business. We are well-positioned to take advantage of this trend.”

On financial front the consolidated net revenue from operations of Wipro reached to Rs 12952 crores in Q3FY16 compared to Rs 12567 crores in Q2FY16, an increase of 3.06 per cent quarter on quarter (QoQ). The EBITDA stood at Rs 2763 crores this quarter compared to Rs 2782 crores in Q2FY16, a decrease of 0.68 per cent QoQ. The EBITDA margin stood at 21.33 per cent this quarter compared to the margin of 22.13 per cent in Q2FY16. The decrease in EBITDA is attributed to increase in technical fees of company by 9.63 per cent this quarter, standing at Rs 1741 from Rs 1588 crores in Q2FY16. The net profit stood at Rs 2234 crores in Q3FY16 compared to Rs 2235 crores in Q2FY16 a decrease of 0.05 per cent QoQ.

The nine month ending, consolidated net revenue from operations increased by 7.8 per cent and reached to Rs 37889 crores compared to Rs 35147 crores for the same review period last year. The net profit for the same nine month period stood at Rs 6657 crores compared to Rs 6381 crores, an increase of 4.33 per cent as compared to the same period last year. In constant currency (CC) terms Wipro's IT Services Segment Revenue in dollar terms grew 1.4% sequentially; and 6.3% YoY. IT Services Segment Revenue was $1,838.3 million.

During the quarter Wipro significantly minimized the impact on revenues, hampered due to the Chennai floods, by strong execution of robust Business Continuity Plans (BCP). The additional expenses incurred in deploying BCP impacted operating margins for the quarter. Further it also acquired two high potential companies-Cellent and Viteos to build competitive differentiation.

Wipro also informed BSE that the Board of Directors of the Company at its meeting held have considered and approved an interim dividend of Rs 5 per equity share of par value Rs 2. After the announcement of Q3 results the stock declined by more than 2 per cent to Rs 531.75 in early morning trade. The stock currently is trading at Rs 543.50 an increase of 0.10 per cent from previous close.