Wipro Q1 profit declines by 6.7 per cent

Wipro on Tuesday missed Street expectations with over 6 per cent fall in net profit for the first quarter ended June and forecast that IT services sales would grow less than 1 per cent in July-September.

The company, which announced the disappointing set of numbers after markets hours on Tuesday, expects revenue from IT services to be $1,931-1,950 million for the September quarter, that is flat to 1 per cent sequential growth.

IT services revenues, which account for a dominant chunk of Wipro’s business, grew 2.6 per cent sequentially to about $1,931 million for the June quarter, meeting the guidance of $1,901-1,939 million.

“We are seeing a certain level of run-the-business getting automated and that had a level of revenue reduction.

“Customers are investing in digital change-the-business which is gradually picking up... I think all of that is reflected in the guidance that we have provided,” Wipro CEO and Member of the Board, Abidali Z Neemuchwala said.

He said September sales forecast was based on what the company perceived to be “predictably achievable” and expressed confidence that operational improvements will start reflecting more strongly from December quarter onwards.

“Overall I think the demand environment, we see quite stable,” he said, adding that the company bagged seven deals in the digital space during the first quarter. On the muted numbers, Rikesh Parikh, VP (Markets Strategy & Equities), Motilal Oswal Securities, said September quarter guidance was a “dampener”.

For the quarter ended June 2016, net profit stood at Rs 2,052 crore as against Rs 2,192 crore in the year-ago period. Its total income from operations rose almost 11 per cent.