Wipro Beats Estimates, Fears Slowdown In U.S. Healthcare Business

Wipro Ltd.’s profit rose more than estimated in the three months ended March even as India’s third most valued information technology company predicted a possible slowdown in its healthcare software services business in the U.S.

The Azim Premji-led conglomerate’s net profit rose 7 percent sequentially to Rs 2,267 crore, according to its stock exchange filing. Revenue climbed 5.1 percent to Rs 14,470 crore, while operating profit margins remained flat at 21 percent. Revenue in dollar terms stood at $1,954.6 crore, higher than what the company had forecast in December.

The outsourcer expects revenue to remain flat or lower in the next quarter between $1,915 million and $1,955 million, according to its media release.

Healthcare in the U.S. is expected to undergo a change as repealing the Affordable Care Act (a.k.a Obamacare) was one of President Donald Trump's campaign promises. Obamacare was regarded as a lucrative source of new customers by health insurers.

Wipro’s healthcare services business posted an operational loss of Rs 11 crore in the quarter ended March. The healthcare vertical, which contributes over 15 percent to the company’s revenue, was the only segment along with communications services where revenue declined.

Neemuchwala explained that Wipro has had “several project cancellations” in healthcare which will have an impact in the next quarter. He was quick to add though that the company expects the growth to return in the second quarter of FY18.

Other Key Highlights:

• Wipro's business operations grew the fastest in Europe, rising 6.4 percent sequentially, four times the pace of growth in the U.S.
• Attrition rate dipped in the fourth quarter to 14.8 percent from 15.4 percent in the previous quarter.
• The company added 51 new clients – 13 of them were in the small-ticket bucket contributing less than $1 million each to the company's revenue.
• Digital and cloud services contributed almost one-fourth to the company's revenue in the January-March quarter. The contribution from digital services has grown over 4.5 percentage points through financial year 2017.
• The board decided to issue one free share for every share held in the company. The bonus shares will be issued out of the company's free reserves.

• Wipro also re-appointed Azim Premji as the chairman and managing director for another two years.