Wipro Q4 net dips to Rs.3,074 cr; board approves Rs.12,000 cr share buyback

New Delhi: IT major Wipro on Thursday posted a 0.4 per cent decline in its consolidated net profit to Rs 3,074.5 crore for the March 2023 quarter and guided for a 1-3 per cent sequential decline in revenue from IT services business in the June quarter amid a weak macro environment.

The Wipro board also announced a share buyback of up to Rs 12,000 crore through the tender offer route, entailing 26.96 crore equity shares at a buyback price of Rs 445 apiece.

The buyback price is at an 18 per cent premium to Thursday's closing price of Rs 374.35 a share on BSE.

Wipro's Q4 FY2023 show was muted, as the company reported a net profit of Rs 3,074.5 crore, a decline of 0.4 per cent year-on-year. The revenue rose 11.7 per cent year-on-year to Rs 23,190.3 crore.

Wipro CEO and Managing Director Thierry Delaporte talked about softness in the banking, financial services, CPG and retail sectors due to the current macro environment but asserted that there are no radical changes in deal cycles, no reduction in deal sizes or cancellations. The ramp-downs, he said, are restricted to discretionary spending.

"In fact, we are seeing more large deals in our pipeline, and we are on it," Delaporte said at the earnings briefing, as he exuded optimism about the company's ability to win deals.

The company highlighted that it closed FY23 with the "strongest ever bookings recorded in a year".

"We delivered two consecutive quarters of total bookings of over USD 4.1 billion. Our large deal order booking grew by 155 per cent year-over-year for the quarter," Delaporte said.

The Wipro top honcho said the share buyback is part of the company's philosophy to deliver consistent returns to shareholders.

In a filing, Wipro said its board "...has approved a proposal to buyback up to 26,96,62,921 equity shares, being 4.91 per cent of the total paid-up equity shares of the company, for an aggregate amount not exceeding Rs 120,00,00,00,000 at a price of Rs 445...per equity share".

Members of the promoter and promoter group of the company have indicated their intention to participate in the proposed Buyback, it added.

Wipro had major buyback programmes in the past. In April 2019, the company announced a Rs 10,500 crore buyback offer at an offer price of Rs 325 per share. In November 2020, it announced up to Rs 9,500 crore share buyback plan at a price of Rs 400 per share.

Bengaluru-headquartered Wipro - which competes in the IT services space with larger rivals like Tata Consultancy Services (TCS) and Infosys - posted a net profit of Rs 3,074.5 crore for the just-ended quarter, against Rs 3,087.3 crore in the year-ago period.

The revenue for March 2023 quarter stood at Rs 23,190.3 crore, 11.17 per cent higher year-on-year.

IT services segment revenue increased to USD 2,823.0 million, an increase of 0.7 per cent sequentially and 3.7 per cent year-on-year. Its operating margin for the quarter was at 16.3 per cent, flat quarter-on-quarter.

The earnings per share for the quarter was Rs 5.61 (USD 0.071), an increase of 0.7 per cent quarter-on-quarter and a decrease of 0.5 per cent year-on-year.

Voluntary attrition decreased 330 basis points from the previous quarter, landing at 14.1 per cent on a quarterly basis and at 19.2 per cent on a trailing twelve months basis. The company said that it will "continue to hire basis demand".

"We continue to hire...there is demand...obviously the attrition has reduced, so we need to take that into account, and also we have hired a lot of next-gen associates who we can now leverage in our organisation," Delaporte said, adding that all of these components are being factored in.

The total headcount of the company stood at 2,56,921 in the just-ended quarter, a decline of 1,823 when compared to 2,58,744 in the December quarter.

For the full FY23, the net profit of Rs 11,350 crore was 7.1 per cent lower than the preceding fiscal, while revenue of Rs 90,487.6 crore was 14.4 per cent higher.

"We expect revenue from our IT Services business including India State Run Enterprise (ISRE) segment to be in the range of USD 2,753 million to USD 2,811 million. This translates to sequential guidance of -3.0 per cent to -1.0 per cent in constant currency terms," Wipro said in a statement.

It is pertinent to mention that the results of top-tier companies TCS and Infosys announced earlier this month, tripped on global uncertainties and missed street estimates.

Infosys' latest report card was a disappointment on several fronts - the company missed revenue guidance for FY23 hit by unplanned project ramp-downs and decision-making delays by some clients.

With global macroeconomic uncertainties looming, it has given a subdued 4-7 per cent revenue growth forecast for FY24, with its top management cautioning that "the environment remains uncertain".

TCS numbers too fell short of street estimates. On April 12, the software major opened the earnings season for the March quarter with a 14.8 per cent growth in net income to Rs 11,392 crore against Rs 9,926 crore in the year-ago period.

TCS, the largest software company by revenue and market value, said its revenue rose 16.9 per cent to Rs 59,162 crore in the March 2023 quarter from Rs 50,591 crore a year ago.