Wipro net down 6% in June qtr

Wipro’s June 2016 quarter performance once again reflected that the transformation the company is going through is still a work in progress, as the company disappointed the Street with its key financials.

The Bengaluru-headquartered company, though it managed to meet the middle end of its dollar-term revenue projection given for the April-June period, disappointed on the net profit growth and profit margin fronts apart from giving conservative revenue guidance for the September quarter. For the quarter ended June 30, 2016, Wipro reported Rs 2,050 crore ($304 million) in net profit, a decline of six per cent over the year-ago period, while revenues at Rs 13,600 crore ($2 billion) saw an increase of 11 per cent.

The flagship information technology (IT) services business reported a three per cent decline in operating profit at Rs 2,330 crore ($345 million) and Rs 13,109 crore ($1.9 billion) in revenues, an increase of 13 per cent. On a sequential quarter basis (compared with the preceding quarter), the IT services business's operating profit declined by 9.3 per cent, while the revenues went up 2.42 per cent.

A Bloomberg survey of 33 analysts had estimated Wipro to report a net profit of $326.35 million, or Rs 2,181 crore on a revenue of $2.05 billion, or Rs 13,778.30 crore, for the quarter.

The company said that the profit took a hit, primarily as it is in an investment mode, both in buying out assets (companies) whose margins profiles are typically different, as well as investment towards people. This also impacted the operating margin of the IT services business, which declined by around 190 basis points (bps) to Rs 17.8 crore, when compared with the previous quarter.

Wipro Technologies (Wipro Ltd)