Interest income fall dents Wipro's Q3 net profit
Tuesday - January 14, 2020 9:19 pm , Category : BUSINESS
Bengaluru, Jan 14 (IANS) Global software major Wipro on Tuesday posted a fall in its third quarter net profit, both year-on-year and sequentially, caused by a big drop in its interest income."Interest income has fallen quarter-on-quarter by a large quantum that has resulted in net profit dropping inspite of operating margin actually expanding," Wipro Chief Financial Officer Jatin Dalal told IANS here.Wipro reported a consolidated net profit of Rs 2,463 crore in the October-December quarter of 2019-20, registering a 3.2 per cent decline annually from Rs 2,545 crore clocked in the same quarter a year ago.Sequentially too, the city-based IT firm's net declined 3.8 per cent to Rs 2,463 crore, from Rs 2,561 crore a quarter ago.Giving an overview of the company business, Chief Executive Abidali Neemuchwala said the overall demand environment has neither improved not deteriorated, but the firm sees some level of uncertainty due to various geo-political risks.Outlining the quarterly performance and demand scenario, Neemuchwala said: "Our revenues grew by 1.8 per cent in constant currency terms, at the mid-point of our guidance range. On a year to date basis, we grew at 4.3 per cent in constant currency terms."He said the financial services segment saw a slowdown in growth rates because of continued softness driven by the macro-economic environment."We however remain confident on winning the new deals that we are participating in leveraging our strong capabilities in digital," Neemuchwala said.He said a large percentage of Wipro's top 10 clients are from the Business Financial Services and Insurance (BFSI) verticals, including the top two, many of which declare furloughs in the last two weeks of the third quarter.As a result, a lot of digital deals which get renewed every month or every few weeks faced uncertainty."Sometimes it is the last quarter for many of the banks and if they are short on budgets there is a pause in those digital expenditures, and that comes back," he added. According to the CEO, digital project expenditure by nature is a discretionary spend.Wipro's Consumer business grew by 12 per cent year-on-year in the third quarter with a few deal wins.The Energy, Natural Resources and Utilities (ENU) and Communications verticals grew moderately in the third quarter, he said."We see a recovery in Manufacturing and are encouraged by the order book as well as the pipeline," said Neemuchwala.Though the Health business saw a seasonal uptick in Health Plan Services (HPS), Tech Business Unit (Tech BU) was impacted by furlough and slowdown in spend by semi-conductor industries customers, Neemuchwala said.Wipro's operating margin in during October-December 2019 was registered at 18.4 per cent compared to 18.1 per cent in the corresponding quarter the previous year, propelled by rupee depreciation and favourable movement.