Wipro ADRs fall 1.41% on NYSE over weak Q2 results, Q3 guidance

Wipro ADRs closed in the red on Friday on the New York Stock Exchange (NYSE) apparently in response to the third-largest Indian IT services exporter reporting weak September quarter (Q2) results and a flattish IT revenue guidance for the December quarter (Q3). The Wipro ADR lost 1.41 percent to end at $9.78 on Friday. The ADR gained 4.19 percent in after-hour trading on the NYSE, according to available data.

The Bengaluru-based IT software services exporter reported 7.6 percent fall in consolidated net profit to Rs 2,070 crore year-on-year (YoY) while the IT services revenue came in at $1,916 million, lower than the $1,931-1,950 million guidance given by the company for Q2.

The outlook for the December quarter (Q3) marks a growth of 0-2 percent over the second quarter revenues. "We expect Revenues from our IT Services business to be in the range of $1,916 million to $ 1,955 million," the company said in a statement.

The IT services margin remained unchanged at 17.8 percent in Q2. "We maintained margins in Q2 despite the impact of salary increase for an incremental two months due to strong operational improvements in automation-led productivity, offshoring and utilization," Jatin Dalal, chief financial officer, said in a statement.

"As we look forward, the demand environment is mixed in a seasonally weak quarter affected by furloughs and lower number of working days," he added.

Unlike its other two rivals — Infosys and Tata Consultancy Services (TCS) — Wipro did not declare interim dividend for the quarter. Infosys will be paying Rs 11 per share while the interim dividend payout at TCS will be Rs 6.50 per share.

Wipro's latest acquisition is US-based cloud application services company Appirio for $500 million. Indianapolis-headquartered Appirio, with a head count of 1,250 employees, has offices in San Francisco, Dublin, London, Jaipur, and Tokyo, and serves clients such as Stryker, Robert Half, Johnson Controls, Cardinal Health, Coca-Cola, eBay, Facebook, Home Depot, and Sony PlayStation.

The acquisition is likely to be closed by December 31 2016.

The impact of the results declared on Friday after market hours will be reflected next week when the stock markets open on Monday. The stock closed at Rs 499.20 on Friday on the Bombay Stock Exchange (BSE).