Updated January 15th, 2024 at 09:53 IST
Wipro surges 14% following upbeat Q3 results despite industry challenges
The company's net profit for the quarter stood at Rs 2,694 crore, reflecting a 12% year-on-year decline.
Wipro shares surge: The shares of IT giant Wipro surged 13.65 per cent in the wake of its better-than-expected results for the third quarter of the financial year. The IT services company reported a constant currency (CC) revenue degrowth of 1.7 per cent sequentially, which exceeded the upper end of its degrowth guidance of 3.5 per cent to 1.5 per cent. Analysts describe the quarterly performance as "much better than worst fears," indicating a positive trajectory for the company despite prevailing industry challenges.
Profit, revenue fall
The company's net profit for the quarter stood at Rs 2,694 crore, reflecting a 12 per cent year-on-year decline. Wipro's consolidated revenue came in at Rs 22,205 crore, down 4.4 per cent year-on-year, slightly below analyst estimates of Rs 22,343 crore.
Despite the decline in YoY revenue and profit, the sequential performance showcased resilience, with a 1.8 per cent rise in the bottom line and a 1.4 per cent fall in the topline for the December quarter. Wipro's management provided a glimmer of hope by highlighting "green shoots" in discretionary demand, particularly noting double-digit sequential growth in the consulting practice.
Wipro's CEO, Thierry Delaporte, expressed optimism during a post-earnings media conference, stating, "There is some stabilisation now from revenue deceleration." The company's consulting business is showing early signs of a return to growth, with double-digit growth at Capco, a firm acquired in 2021.
The positive outlook and better-than-expected results led to a surge in Wipro's shares, closing 3.88 per cent higher at Rs 465.45 apiece on BSE. The stock's performance contradicts initial concerns about the IT sector's challenges, with larger rivals Tata Consultancy Services and Infosys also posting optimistic results.
Wipro's ADRs (American Depository Receipts) rose by 3.5 per cent in pre-market trading, indicating positive sentiment among international investors. The company's revenue of $2.68 billion surpassed estimates.
Analysts suggest that the commentary from Wipro's management is slightly more positive than in previous quarters, with expectations that macroeconomic improvements will lead to positive results, especially in businesses like consulting, which involve discretionary spending. Despite the challenging macroeconomic environment, Wipro's Q3 results and the subsequent surge in share prices signal a resilient performance and instill confidence in the company's future prospects.
Published January 15th, 2024 at 09:53 IST