12-Jan-2024
2 mins read
Wipro, a leading IT services company, reported a significant 12% year-on-year drop in net profit for the third quarter, standing at Rs 2,694 crore. This quarter marks the fourth consecutive period of declining profits, highlighting ongoing challenges in the sector.
Revenue Below Expectations
The company’s consolidated revenue also fell by 4.4% year-on-year to Rs 22,205 crore, falling short of analyst predictions of Rs 22,343 crore. This decrease underscores a broader trend in the industry and raises concerns about future growth prospects.
Tightening Revenue Growth Guidance
In response to these challenges, Wipro has adjusted its revenue growth guidance for the fourth quarter to a range of -1.5% to 0.5%. This cautious forecast follows a previous guidance reduction, indicating a conservative approach amidst uncertain market conditions.
Seasonal Weakness and Market Challenges
The third quarter is traditionally a weaker period for IT companies due to holiday-related slowdowns in key markets like the US and Europe. Factors such as furloughs and reduced working days have impacted performance. Particularly, Wipro has faced difficulties in the banking, financial services, and insurance sectors, coupled with reduced discretionary spending affecting its consulting services.
Comparison with Industry Peers
In contrast to Wipro’s performance, Tata Consultancy Services reported a modest 2% increase in net profit, while Infosys saw a 7.3% drop in the same period. These mixed results among top IT firms reflect the diverse impacts of current economic conditions on the sector.
Financial and Stock Performance Details
Wipro’s operating margin showed a slight decrease to 16%, influenced by wage hikes and furloughs. Despite these challenges, the company announced an interim dividend of Re 1 per share. On a positive note, Wipro’s shares closed 3.88% higher at Rs 465.45 each on the BSE, offering a glimmer of resilience amidst a challenging quarter.