Wipro not an exception; drops after announcing results

Following in the footsteps of other IT giants, Wipro, the third largest IT company by market capitalisation has announced disappointing results for Q1FY17. The stock on Wednesday has opened with a gap-down of 31 points at Rs 525.

The recent Britain’s exit from European Union may bring about delay in discretionary spending by clients in near term. The technology spending would be curbed specifically in financial, banking and insurance sector. Hence, companies have maintained muted outlook for coming quarter.

Overall IT companies witnessed positive revenue growth but margin pressure persisted. Current fiscal is likely to remain challenging for the IT companies. The companies have witnessed slowdown in deal finalisation. Moreover, 40 per cent of new deals are from digitalisation. However, the outsourcing business has increased reasonably and can bring some recovery thereby.

The consolidated revenues of the company have come in at Rs 13697.6 crores in June 2016 quarter as against Rs 13741.7 crores in the previous quarter. EBITDA has dropped to Rs 2751.1 crores as against Rs 2914 i.e. a decrease of 5.6 per cent. Thereby net profits too have plunged by 8.2 per cent to Rs 2051.9 crores.

On a year on year basis, however, Wipro has witnessed a rise in revenues by 11.1 per cent and are standing at Rs 12370.6 crores in the corresponding period of previous year. EBITDA too has seen a growth of 6.4 per cent from Rs 2738.9 crores in Q1FY16. Net profits have risen marginally by 2.2 per cent from Rs 2187.7 crores.