Wipro profit dips 7%, Q2 growth to be lower

BENGALURU: India’s third-largest software exporter, Wipro, on Tuesday reported a 7% fall in net profit to ₹2,058.9 crore for the first quarter ended June 2016, against

BENGALURU: India’s third-largest software exporter, Wipro, on Tuesday reported a 7% fall in net profit to ₹2,058.9 crore for the first quarter ended June 2016, against the same period last year, missing analyst estimates of ₹2,171 crore.

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New costs due to acquisitions completed during the previous year, higher wage bills in the current fiscal, and lower profitability in Indian and West Asian businesses resulted in lower margins during the first quarter, the company said.

Revenue rose 11% to ₹13,698 crore during the quarter, compared to the year-ago period.

Revenue from IT services grew 13.2% to ₹13,109.2 crore, from ₹11,577.3 crore a year ago.

The company forecast muted revenue growth of 0.1% to 1% in the current quarter, compared with the previous quarter, and warned Britain’s decision to leave the European Union could lead some customers to defer business over the medium term. The company said it was also “fundamentally changing” its business model in India and West Asia, where it is facing headwinds, without elaborating.

Analysts warned that low revenue guidance for the current quarter means Wipro will struggle to post a double-digit percent rise in revenue in the current fiscal. “Revenue performance in top clients continues to be disappointing with top 5/10 clients declining for several quarters in a row,” Emkay Research said.

Last week, TCS beat expectations with a net profit of ₹6,513 crore, while Infosys missed forecasts with of ₹3,436 crore.