New York-listed shares of Wipro Ltd. tanked 7% on Friday after third quarter financial results missed estimates. The American Depository Receipt (ADR) of the company fell to $2.76 as of 8:20 p.m. India time.
The ADR is a tool for multinationals/foreign companies (primarily based outside the US) or organisations to trade on US stock markets, just like regular shares of US companies. In theory, an ADR is similar to a special certificate issued by a US bank. It is a negotiable certificate representing shares in a foreign company traded on US stock exchanges.
Wipro's Q3 operating margin declined by 140 basis points on a sequential basis and overall profitability weakend. The company had a one‑time impact of Rs 565 crore related to labour code changes and restructuring.
Wipro Q3 Results (Consolidated, QoQ)
- Revenue up 3.8% at Rs 23,556 crore versus Rs 22,697 crore (Bloomberg estimate: Rs 22,697 crore)
- Profit down 4.4% at Rs 3,119 crore versus Rs 3,246 crore (Estimate: Rs 3,354 crore)
- EBIT down 5.1% at Rs 3,491 crore versus Rs 3,681 crore (Estimate: Rs 3,727 crore)
- Margin at 14.8% versus 16.2% (Estimate: 16.4%)
- Note: New Labour Code impact of Rs 303 crore in Q3
Additionally, total bookings stood at $3,335 million, down 5.7% year-on-year in constant currency.
Large deal bookings was at $871 million, decrease of 8.4% YoY in constant currency. Net income for the quarter was at $347.2 million, decrease of 3.9% QoQ and 7.0% YoY.
The IT giant expect revenue from its IT Services business segment to be in the range of $2,635 million to $2,688 million, translating to sequential guidance of 0% to 2.0% in constant currency terms.
Shares of Wipro ended 2.5% higher at Rs 266.8 on the NSE, ahead of the results, compared to a 0.1% advance in the benchmark Nifty 50. The stock is down 7.4% on a 12-month basis.
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