Wipro Q4FY18 result: 5 key developments you should know

For the fourth quarter ended March 2018, IT service provider Wipro witnessed decline of 20.56% in it’s consolidated net income which came in at Rs 1,800.80 crore compared to Rs 2,267 crore in the corresponding period of the previous year. The current net income also plunged by 7% from Rs 1,930.1 crore of the preceding quarter. With this, the company missed analysts estimate, as a Bloomberg poll of analysts predicted net income of Wipro to come in at Rs 2,127 crore in Q4FY18. 

On the other hand, consolidated revenue came in at Rs 13,768.6 crore during the quarter which decreased by 1.56% compared to Rs 13,987.50 crore in Q4FY17 but gradually rose by 0.73% versus revenue of Rs 13,669 crore in Q3FY18. 

Apart from weak Q4FY18, there was a list of development that the company announced. 

Issue of Bonus share

In it’s financial audit report, Wipro mentioned that a total of 2,433,074,327 bonus share have been issued at a price of Rs 4,866 per piece having a face value of Rs 2 per share during the quarter. 

The bonus issue in the proportion of 1:1 i.e, one bonus equity share of Rs 2 each for every one fully paid-up equity share held was approved by shareholders on June 03, 2017. For the purpose, June 14, was fixed as record date. 

However, the transfer of the shares has been made in this period. 

BuyBack of equity shares 

In this period, Wipro concluded buyback of 343.75 million equity shares, which has resulted in a total cash outflow of Rs 11,000 crore. 

Capital Allocation

The Board of Directors at its meeting held on January 19, 2018, had declared an interim dividend of Rs 1 per equity share for the financial year 2017–18. The Board recommends adoption of the interim dividend as the final dividend for the financial year 2017–18. Thus, the total dividend for the financial year 2017–18 remains Rs 1 per equity share. We also completed a buyback of  Rs 11,000 crore in December 2017. 

Asset held for sale

Wipro signed a definitive agreement to divest its hosted date center services business to Ensono Holding LLC and it’s affiliates. The sale is expected to conclude during June 2018 quarter. 

Wipro will unlock value by transitioning eight data centers and over 900 employees of its hosted data center services business to Ensono. As part of the agreement, Wipro will make a strategic investment of $55 million in Ensono’s combined entity. 

Going ahead, Wipro has also reduced it’s equity holding in Wipro Airport IT Services Limited to 11% from previous 74%. 

Wipro said, “These disposal groups do not constitute a major component of the company and hence are not classified as discontinued operations.” 

Outlook Q1FY19

Wipro said, “We expect Revenue from our IT Services business to be in the range of $2,015 million to $2,065 million*. We had announced the divestiture of our hosted data center services business to Ensono for a consideration of $405 million. 

It added, “We expect the transaction to complete during the quarter ending June 30, 2018. For the purpose of the Outlook, we have not considered the impact of the divestment on the Revenue for the quarter ending June 30, 2018. We will revise the Outlook for the quarter based on the actual date of completion of the divestment.”

For the year end FY18, Wipro recorded gross revenue of Rs 54,490 crore down by 1% year-on-year, whereas net come also decreased by 5.7% on yearly basis to Rs 8,010 crore.