Wipro board approves Rs 9,500-crore share buyback; revenue up 1.4%

 Wipro, India’s fourth-largest IT services company, on Tuesday approved a share buyback worth Rs 9,500 crore, having improved its performance in the second quarter of FY21 on several parameters, apart from giving a stronger outlook.

This is the second quarter in a row that the Bengaluru-based firm is going for a share buyback programme.

The company is looking at buying 237.5 million equity shares, or 4.16 per cent of its paid-up capital, though the date of the programme has not been fixed.

The buyback is proposed to be made from the shareholders on a proportionate basis under the tender-offer route, the company said in a regulatory filing.

The repurchase price has been set at Rs 400 per share, a 6.25 per cent premium to Tuesday’s closing price.

“Members of the promoter and promoter group of the company have indicated their intention to participate in the proposed buyback,” the company added.

Tata Consultancy Services, India’s largest IT services company, last week announced a share buyback, the third such programme of the Mumbai-headquartered company in the past four years.

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The buyback, worth Rs 16,000 crore, is 1.42 per cent of its paid-up capital. Wipro, too, had completed a buyback of Rs 11,500 crore in August last year. That amounted to repurchasing 5.35 per cent of paid-up capital then.

“Globally, buybacks and dividends are both important to return cash to the shareholders,” said Jatin Dalal, chief financial officer.

“Our payback policy is returning 45-50 per cent of net income to our shareholders and we will choose the model that is best for our shareholders,” he added.

In the quarter ended September 30, Wipro showed a marked improvement in its performance though it is yet to reach the pre-Covid level.

The company reported a net income of Rs 2,484 crore, a growth rate of 3.4 per cent year-on-year and 3.9 per cent sequentially.

The consolidated revenue of the company, at Rs 15,100 crore, was nearly flat year-on-year while it increased 1.4 per cent quarter-on-quarter.

In the key IT services segment, the company’s revenue saw a marginal decline of 0.24 per cent over the same period in the previous financial year while sequentially it grew 0.76 per cent. The operating margin of the company’s IT services business in the quarter was 19.2 per cent, an improvement of 20 basis points over the previous quarter and 110 basis points year-on-year.

Wipro has resumed the practice of giving the revenue growth guidance, saying it was expecting its IT services revenue in Q3 to be $2,022-2,062 million, a growth rate of 1.5-3.5 per cent sequentially.

ON RECOVERY PATH

Company expects revenues to grow at 1.5-3.5% in Dec qtr

Deal pipeline almost back to pre-Covid level; demand environment better

To give promotions to 80% of eligible staff in Q3

Looking at giving salary increment to junior employees

“We had an excellent quarter with growth in revenues, expansion in margins, and robust cash generation, and I am excited about the opportunities that are ahead of us and encouraged by the acceleration in the business momentum we have seen this quarter,” said Thierry Delaporte, chief executive officer and managing director.

“The demand environment has improved from Q1. The intensity of sales continues to rise, and the pipeline is robust. The pace of decision making has improved though it is still a bit slow on larger ticket-hunting deals.”

The company’s growth during the quarter was broad-based and was led by the biggest vertical -- banking, financial services, and insurance (BFSI) -- which showed a growth rate of 5.4 per cent on a sequential basis though on a year-on-year basis it declined 2.8 per cent.

In terms of geography, all the major markets of the company, including the Americas and Europe, improved their performance over the previous quarter through they lagged in comparison to the previous year.

“Wipro has reported in-line performance on both the revenue and margin fronts, while its revenue guidance for Q3FY21 remained slightly higher than our expectations,” said Sanjeev Hota, head of research, Sharekhan by BNP Paribas.

The company said it decided to give promotions to 80 per cent of its eligible employees in Q3 while it was exploring giving salary increments to junior employees who were hired through campus recruitment programmes.

“We will undertake a series of employee intervention programmes,” said Saurabh Govil, president and chief human resources officer.

Wipro board approves Rs 9,500 crore buyback at Rs 400 per share

 Indian IT services provider Wipro's board has approved a share buyback worth Rs 9,500 crore as a part of its September quarter results on Tuesday.

The Bengaluru-based company has planned to buy 237.5 million equity shares or 4.16 per cent of the total paid-up capital. The buyback is proposed to be made from the existing shareholders on a proportionate basis under the tender-offer route, according to an exchange filing. The repurchase price has been fixed as Rs 400 per share and it is at a 6.25 per cent premium to Tuesday's close.

The record date of the said buyback was not fixed. "Members of the promoter and promoter group of the company have indicated their intention to participate in the proposed buyback," the company added.

ALSO READ: Wipro Q2 PAT down 3.4% YoY at Rs 2,465.7 cr; announces Rs 9,500 cr buyback

Last week, Tata Consultancy Services' board had approved a share buyback, the third one of the Mumbai-headquartered company in the past four years. The buyback, worth Rs 16,000 crore, is 1.42 per cent of its paid-up capital. Wipro, too, had completed a buyback of Rs 11,500 crore in August last year that amounted to repurchasing of 5.35 per cent of then paid-up capital.

Wipro to consider share buyback proposal, decision on 13 Oct board meeting

 After industry leader Tata Consultancy Services, IT services firm Wipro is also considering to go for a share buyback. The Bengaluru-headquartered firm said in a filing with the stock exchanges on Wednesday that the company’s Board of Directors in its meeting scheduled on October 13 would consider a proposal of buyback of equity shares.

Wipro is the second large Indian IT services firm to consider a buyback programme after market leader TCS announced one. TCS in its board meeting held on Wednesday also approved to proposal to go for a Rs 16,000 crore buyback programme at Rs 3,000 a piece.

Typically, the share buyback programme of a company reflects the belief of its management over the growth prospects of a company. During the ongoing Covid-19 pandemic, the export-oriented IT services industry in the country have largely remained resilient though they have seen some impact in sectors such as hospitality and aviation.

While TCS which announced its Q2FY21 results on Wednesday showed better than expected numbers, Wipro is announcing its numbers next week. The company which in the previous quarter announced former Capgemini top executive Thierry Delaporte as its new CEO & MD, is looking at improving its performance in coming quarters.

Abidali Neemuchwala quits as Wipro CEO and MD, cites 'family commitments

Abidali Z Neemuchwala has quit as the chief executive officer and managing director of Wipro, the IT services company said on Friday.

Neemuchwala, 52, is leaving due to "family commitments” and will continue to hold office until a successor is appointed, said Wipro in a regulatory filing.

He joined Wipro in April 2015 as the president and chief operating officer, after having served at larger rival Tata Consultancy Services.

Neemuchwala was made CEO the following year and took on the additional role of managing director in 2019 when billionaire and philanthropist Azim Premji step down as the company’s chairman and his son Rishad Premji was appointed in his place.

Wipro's stock rose about 13 per cent under Neemuchwala's tenure as the CEO, compared to a 59 per cent rise in India's blue-chip NSE Nifty 50 index, reported news agency Reuters.

Wipro, India's fourth largest IT services company, on January 17 reported a 35.1 per cent year-on-year (YoY) jump in its net profit at Rs 2,552.6 crore for the second quarter of the financial year 2019-20 (FY20). On sequential basis, the figures grew 6.9 per cent.

Growth has remained a concern at the Bengaluru-based company. Wipro has been hit by a spending crunch from its key Western clients, who seek better services at cheaper rates, said Reuters.

"lt has been my honour and privilege to serve Wipro, a company with a rich legacy of almost 75 years," said Neemuchwala about his resignation in a company press release.

A company representative declined to provide further details on Neemuchwala's resignation or on his future plans, said Reuters.

'We thank Abid for his leadership and his contributions to Wipro," said Rishad Premji.

Wipro Q2 net profit jumps 35.1% YoY to Rs 2,552.6 crore

Wipro on Tuesday posted a 35.1 per cent year-on-year (YoY) jump in its net profit at Rs 2,552.6 crore for the second quarter of the financial year 2019-20 (FY20). Gross revenue for the period came in at Rs 15,130 crore, up 4 per cent YoY.

Earnings per share (EPS) for the quarter was Rs 4.3 per share and grew 36.7 per cent YoY, the company said in its statement.

“We had a good in-quarter execution on both revenues and margins. The overall growth was broad based with 6 out of 7 industry verticals growing on a YoY basis and we signed a large deal in India aligned to our strategy of taking global offerings to India customers," said Abidali Z Neemuchwala, CEO and Managing Director.

As regards the outlook for the quarter ending December 31, 2019, the company said it expects revenue from IT Services business to be in the range of $2,065 million to $2,106 million. This translates to a sequential growth of 0.8 per cent to 2.8 per cent.

Further, during the quarter the company concluded the buyback of 323.1 million equity shares as approved earlier by the Board of Directors at their meeting held on April 16, 2019. This has resulted in a total cash outflow of Rs 10,500 crore ($1.49 billion).

IT Products Segment Revenue for the quarter was Rs 320 crore while IT Products Operating Margin for the quarter was 4.6 per cent.

Wipro Consumer Care sets up start-up venture fund in consumers brand space

Wipro Consumer Care and Lighting has launched a venture fund to invest in start-ups in the consumers brand space. It will focus on firms where both parties can learn by leveraging their strengths and add value to each other.

“Our investment in Happily Unmarried was our first step to establishing this venture capital fund. What we bring is deep knowledge of operations and the ability to scale up, and a strong understanding of consumers,” said Sumit Keshan, a former Wiproite and managing partner of the venture fund.

Wipro Aerospace begins work on construction of second plant in Bengaluru

The Aerospace business of Wipro Infrastructure Engineering (WIN) on Monday said it has commenced the construction of its second plant in the city, which will house Aerostructure Machining and Surface Treatment Lines for aerospace components and would employ about 300 people.

The company performed a ground-breaking ceremony for the new plant in Aerospace Special Economic Zone at Devanahalli.

Spread over ten acres, the plant will come up in phases, the company in a release said adding, in the first phase, machining operations will start in the first quarter of 2020.

In the second, surface treatment lines for aerospace components will commence by 2021, it said, adding that when the new facility is fully operational, it would employ about 300 people.

The first plant, spread over seven acres, manufactures hydraulic actuator parts for landing gears and engine cowl opening systems, the company said.

Besides, the company manufactures aero structural parts, it said, in January this year, the Wipro Aerospace commenced deliveries to Boeing from this plant.

"We believe in building an integrated ecosystem for precision flight-critical components and systems. This is important to our success. Once the second plant becomes operational, our facilities will be spread over 17 acres in the SEZ in Devanahalli," Wipro Infrastructure Engineering CEO Pratik Kumar said.

Wipro Infrastructure Engineering (WIN) set up the aerospace business in 2013 as a solutions provider in Actuators (Cylinder & Piston), Aerostructures, Machining, Sheet Metal, Assembly and Testing.

"Over the years Wipro Aerospace has built its capability in precision actuator and aerostructure parts. With this expansion, we will be well positioned for assembly and testing of actuators as well as critical landing system structural assemblies," Head of Aerospace Business in IndiaM, Srinivas Devareddy said.

Wipro exits WAISL JV, sells stake to Antariksh Softtech for Rs 55 lakh

In April last year, Wipro had sold 63 per cent of its stake in Wipro Airport IT Services Ltd (WAISL) to Antariksh Softtech in a Rs 3.15 crore deal.

WAISL was a joint venture (JV) between Wipro (74 per cent) and Delhi International Airport Ltd (DIAL), which held 26 per cent stake. It provided various IT services at the Indira Gandhi International Airport in New Delhi.

Consequent to the April sale, Wipro held 11 per cent stake in WAISL with DIAL holding 26 per cent and Antariksh 63 per cent.

"The parties have now mutually agreed to sell the remaining stake in WAISL to Antariksh. Consequently, Wipro Ltd has exited the JV by selling the remaining 11 per cent stake in WAISL to Antariksh and the JV agreement has been terminated," Wipro said in a BSE filing.

The sale was completed on June 26, 2019 for a consideration of Rs 55 lakh, it added.

The filing said that Antariksh Softtech was incorporated in October 2006.

Antariksh Softtech, along with its group companies, is engaged in the business of providing technology solutions and other information and communication services.

That was IT! Azim Premji, the software czar who believes in joy of giving

It’s the end of a long era at Wipro as Azim Premji, chairman of the software major, calls it a day, handing over charge to his elder son, Rishad, after leading the company for more than 50 years. The Bengaluru-headquartered company on Thursday announced Premji, 75, will step down as executive chairman on July 30.

He, however, will continue to be on its board as non-executive director for five years starting from July 31, 2019. He was conferred the title founder chairman of the company. “Rishad Premji, chief strategy officer and member of the board, will take over as the executive chairman of the company (effective July 31),” Wipro said in a statement. Listen to this podcast for more.

Wipro chairman Premji raises philanthropic contribution to $21 billion | Business Standard News

Billionaire Azim Premji has announced he has raised his commitment for philanthropy by renouncing more of his personal assets and earmarking them to his Azim Premji Foundation endowment.

The Wipro chairman has done this by additionally earmarking all economic benefits for philanthropic purposes in about 34 per cent of the shares in Wipro (current market value at Rs 52,750 crore or $7.5 billion), held by certain entities controlled by him, the Foundation stated. Premji is also chairman of the Foundation.

This is in addition to his earlier donations, which included Wipro's shares and other assets owned by him. With the latest action, the value of the philanthropic endowment corpus contributed by Premji is about Rs 1.45 trillion ($21 billion), which includes 67 per cent of the economic ownership of Wipro, said the Foundation.

The Foundation works directly in the area of education; it also supports other not-for-profits in specific areas through multi-year financial grants. The Foundation's extensive fieldwork in education has been in some of the most disadvantaged parts, to help improve quality and equity of the public (government) schooling system. 

All this in partnership with state governments - this fieldwork is in Karnataka, Uttarakhand, Rajasthan, Chhattisgarh, Puducherry, Telangana, and Madhya Pradesh, along with some work in the northeastern states. The Foundation's field strategy focuses on creating and scaling up a network of institutions at the district and state levels, to contribute to improvement in the school education system. It has also set up the Azim Premji University in Bengaluru. Established with the official aim of developing of professionals in the domains of education and related areas.

The initiative to support other not-for-profits with multi-year grants was started in 2014, enabling expansion to domains other than education. The grants support efforts for tangible improvement in the lives of the poor and marginalised sections. The grants have gone to a little over 150 organisations in a range of domains. The Foundation said it expected to significantly expand its activities over the coming years.