Wipro Q1 net profit up 1.2 pc; announces Rs 11,000-cr share buyback

Wipro today reported a 1.2 per cent rise in its consolidated net profit at Rs 2,076.7 crore for the Apr-June quarter.
Wipro today announced Rs 11,000-cr share buyback ... Source: PTI
Reported by: PTI New Delhi July 20, 2017 20:53 IST

India's third largest IT firm Wipro today reported a 1.2 per cent rise in its consolidated net profit at Rs 2,076.7 crore for the Apr-June quarter, even as it announced a mega buyback offer of Rs 11,000 crore, joining the growing roaster of IT firms returning surplus cash to their shareholders. The Bengaluru-based firm had registered a net profit of Rs 2,052 crore in the year-ago period. Its total income grew marginally to Rs 14,281.4 crore during the first quarter.

The company's board also announced a share buyback proposal of Rs 11,000 crore entailing 34.3 crore equity shares at Rs 320 apiece.

Wipro, which gets bulk of its topline from IT services, said it expects revenues from that business to be in the range of USD 1,962-2,001 million in the September quarter.

For the June quarter, IT services revenue was at USD 1,971.7 million, up 2.1 per cent from the year-ago period.

"We delivered revenues above the upper-end of the guidance range.. Our focus on digital, combined with our investments in client mining, has resulted in strong growth in top accounts," Wipro CEO Abidali Z Neemuchwala told reporters.

He also said in Q1, the company delivered revenues above the upper end of the guidance range, besides revenue grew QoQ .9 per cent in reported currency and 0.9 per cent in reported currency and 0.3 per cent in constant currency.

"As indicated in April, there was uptick in ENU and BFSI led by digital and a recovery in our India business post the restructuring," he said.

Neemuchwala said digital revenues in Q1 constituted 22.5 per cent of revenues with a growth of 3.0 per cent sequentially.

Consulting revenues in Q1 constituted 5.7 per cent of revenues and grew at 3.7 per cent sequentially.

"Wipro's differentiated digital and consulting capabilities are helping us win new businesses," he said.

VP Research (IT) at Angel Broking, Sarabjit Kour Nangra said, "Wipro, announced Q1 FY2018 a good set of numbers..

the quarter was better than expected on all fronts, mainly driven by better than expected volume growth during the quarter."

Wipro, which announced its financial results after trading hours, saw its shares close marginally lower at Rs 269 on the BSE.

On client mining, Neemuchwala said the company continued to build momentum on client mining in Q1.

The mometum of Top 10 accounts growth has accelerated from 2.9 per cent QoQ in Q4 to 4.4 per cent QoQ in Q1, he added.

Wipro CFO Jatin Dalal said the impact on operating margins on account of rupee appreciation and salary increases was partially offset by strong business efficiencies.

"We continue to sustain robust cash generation," he added.

Neemuchwala said the company expects to complete the formalities of the buyback between mid-October and early November.

"I think it is fair to assume that we will be able to complete it (all the regulatory formalities) somewhere between mid-October and early November timeframe," he said.

"The buyback price will be Rs 320 ($4.95) per equity share payable in cash for an aggregate amount not exceeding Rs 110,000 million ($1.7 billion) in accordance with the provisions of Companies Act, 2013 and the SEBI (Buy Back of Securities) Regulations, 1998 (Buyback Regulations)," he added.

Neemuchwala said the Board of Directors has approved a buyback proposal, subject to the approval of shareholders through postal ballot, for purchase by the company of up to 343.75 million equity shares of Rs2 each (representing 7.06 per cent total equity capital) from the shareholders of the company on a proportionate basis by way of a tender offer.

He said the company will give 40 to 45 per cent of payout of annual profits, but this will not be uniform in a way that there are regulatory requirements and conditions that need to be met for buyback.

"So you should not see uniformly every four quarter, but rather see over a period of three years and we will meet the number of payout that we have talked about, both the dividend and buyback in combination," Neemuchwala added.

On the buyback offer, Dalal said the announcement to buyback equity shares is part of Wipro s philosophy to "deliver efficient returns to shareholders."

During the June quarter, Wipro added 1,309 (gross) employees, taking its total headcount to 1,66,790 people.

Wipro, during the quarter ended June 30, 2017, allotted bonus equity shares one bonus share for every one share held to its shareholders.

The company's revenue from IT products during the quarter was Rs 630 crore (USD 98 million), an increase of 7 per cent year-on-year.

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