Wipro Misses Q1 Profit Estimates, Calls Off Viteos Acquisition

IT major Wipro joined a string of other outsourcers in reporting weak numbers for the June quarter amid rising concerns about global growth and Brexit-related uncertainty.

Wipro on Tuesday reported a net profit of Rs 2,052 crore on sales of Rs 13,600 crore in Q1, missing estimates. Wipro's IT services revenue rose in line with estimates, up 2.6 per cent sequentially to $1,930.8 million, but margins declined more-than-expected.

Margins in Wipro's IT services business declined to 17.8 per cent in Q1 on account of salary hikes and consolidation of acquisition, the company said. Wipro's bigger rivals TCS and Infosys had reported margins of 25.1 per cent and 24.1 per cent respectively in Q1.

Wipro's revenue guidance for the September quarter is also likely to disappoint investors. India's third largest IT services outsourcer expects revenue from its IT services business to be in the range of $1,931 million to $1,950 million in the September quarter, indicating a tepid 0-1 per cent sequential growth. (Read more)

"We have delivered revenues in line with our guidance... We expect the trajectory of growth to build gradually over the course of the year as we drive execution on our strategic themes and make progress towards achieving a sustainable growth trajectory," said Abidali Z. Neemuchwala, CEO of Wipro.

In another major development, Wipro called off the proposed acquisition of US-based Viteos Group. Wipro had in December 2015 announced the buyout of shadow-accounting services firm Viteos Group for $130 million.

"Due to inordinate delays in completion of closing conditions that exceeded the target closing date and expiration date under the terms of the agreement, both parties have decided not to proceed ahead with the acquisition," Wipro said in a statement.

Wipro shares closed 0.5 per cent lower at Rs 549.25 on the National Stock Exchange, underperforming the broader Nifty that closed 0.23 per cent higher.