Wipro posts 27.7% rise in Q4 net profit, eyes double-digit revenue growth in FY22

IT services major Wipro on Thursday posted better-than-expected Q4 performance with sound sequential revenue growth coupled with expansion in operating margin. The IT firm said it was their best quarterly performance in the last 10 years.

On the back of momentum in the large deal space, the IT firm guided for 2-4% of sequential (quarter-on-quarter) growth in revenues in Q1 of FY22, which will translate into 11-13% of annual revenue growth in the current financial year.

The Bengaluru-headquartered firm reported 27.78% rise in its net profit at Rs 2,972.3 crore for the fourth quarter ended in March 2021. The net profit rose marginally by 0.14% over the last quarter. Its gross revenues during the quarter grew 3.4% to Rs 16,245.4 crore over the same period a year ago. In dollar terms, gross revenues were at $2.2 billion.

In the IT services segment, which accounts for more than 95% of Wipro's gross revenues, the company reported revenues at $2.15 billion, which is 0.5% on YoY basis in constant currency terms. Sequentially, the IT services’ revenue growth was at 3% in CC terms.

In comparison, TCS grew 4.2% sequentially, while Infosys' revenue rose 2% over the last quarter. Meanwhile, the company didn't declare any final dividend for the fiscal year.

During the fourth quarter, the firm expects its revenue from IT services business to be in the range of $2.19 billion to $2.23 billion, translating into a sequential growth of 2-4%. The company, however, said the guidance didn't include revenues from its recent acquisitions of UK-based consulting major Capco and Ampion. For the whole fiscal, the company may witness 11-13% growth in revenues based on the quarterly guidance.

For FY21, gross revenues were at Rs 61,940 crore ($8.5 billion), an increase of 1.5% over the same period of last year. Net profit rose 11.2% at Rs 10,868 crore for the last financial year.

For the IT services segment, revenues, however, declined by 2.3% to $8.13 billion for FY21 in CC terms. In comparison, TCS has seen a decline of 0.8%, while Infosys has posted a 5% rise in its consolidated revenues in the last fiscal.

The Azim Premji-promoted firm showed marked improvement in the large deal space during the last financial year. In the fourth quarter, Wipro bagged 12 large deals with a total contract value (TCV) of $1.4 billion.

"We delivered a third consistent quarter of strong revenue growth, deal wins and operating margins. We are excited with this wave of business momentum that we are witnessing. All key markets are now growing on YoY basis and this provides us a solid foundation to build on next year growth rates," said Thierry Delaporte, CEO & MD of Wipro.

Wipro posted 340 basis points improvement YoY in its operating margin at 21% for the fourth quarter. However, margins dropped sequentially by 70 basis points owing to wage hikes, and other expenses. For FY21, margins improved 220 basis points at 20.3% as compared to last fiscal year.

"Margins have shown consistent improvement in past quarters. We expect the momentum to continue in the current fiscal year except the first quarter. In the first quarter, salary hikes and investments in key areas will impact margins," said Jatin Dalal, CFO at Wipro.

Among verticals, the company said BFSI (banking, financial services & insurance) vertical posted 2.7% sequential growth, while technology grew around 10% in Q4 of FY21. All major geographies including America 1, America 2 and Europe also showed positive growth in fourth quarter.

The company's attrition level went up by 110 basis points to 12.1% during fourth quarter. It added 7,404 employees on net basis during the fourth quarter to take its headcount to 197,712. The company has given salary hikes in January to its junior employees and is currently doing so for its senior staffers.