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Wednesday 14 October 2020

Green shoots reappear at Wipro

LogoWipro has turned the 7.5% first quarter sequential top line decline (see here) into a 2% qoq constant currency revenue increase in Q220. Turnover of $1.99b for the three months to 30th September was, nonetheless, down 3.4% yoy. Operating margin improved for the second successive quarter adding a further 20 bps qoq to land at 19.2% (Q219: 18.1%).

Solid signs of recovery were evident in the majority of the offshore major’s target industry verticals, all of which had seen their sales fall during Q120. Only the Energy, Natural Resources & Utilities and Technology sectors, which together account for around 25% of Wipro’s global revenues, continued on a downward trajectory during the second quarter.

There was also encouraging news from a regional perspective. All three of the company’s geographic units - Americas, Rest of the World and Europe - reported sequential Q220 top line growth, although in the case of the latter this was by the skin of its teeth (0.1% qoq). For the first half, however, Wipro’s revenue from Europe, within which the UK is the company’s largest country market, was behind by c.6.5% yoy. While this drop is significant, it compares favourably with TCS’s recent UK performance which has seen its turnover here decline by over 8% during the same period (see here).

No full year guidance was provided, but Wipro is positive regarding the near-term outlook and expects next quarter’s revenue to grow sequentially by between 1.5% to 3.5%. The publication of the company’s Q220 numbers also included the announcement of a share buyback of as much as $1.3b. This came less than a week after the declaration by TCS, now world’s most valuable IT services provider, that it is conducting a similar $2.2b exercise helped fuel a 5% surge in the company’s market capitalisation. Wipro would no doubt be delighted if its share price followed suit, albeit this closed down 2% yesterday following the results posting.

Posted by: Duncan Aitchison

Tags: results   offshore   systemsintegration  

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