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Wipro Announces Up To Rs. 11,000 Crore Share Buyback As Q2 Forecast Disappoints
Wipro Ltd, India\'s third-largest software services exporter, announced an up to Rs. 11,000 crore ($1.71 billion) share buyback on Thursday, overshadowing a tepid revenue forecast that fell short of market expectations.
Wipro Ltd, India's third-largest software services exporter, announced an up to Rs. 11,000 crore ($1.71 billion) share buyback on Thursday, overshadowing a tepid revenue forecast that fell short of market expectations.
Bengaluru-headquartered Wipro said it expects revenue from its core IT services business to be in the range of $1.96 billion to $2 billion for the quarter ending September.
That represents a range from a slight fall of 0.5 percent to a 1.5 percent increase over the three months to June 30.
Chief Executive Abidali Neemuchwala said healthcare clients were holding back on spending due to uncertainty over regulations in the United States where President Donald Trump's administration is trying to repeal and replace the 2010 Affordable Care Act, known as Obamacare.
"Now there is a stall. Nothing new is coming in till there is clarity," he said, adding that it was one of the reasons for the company's revenue forecast.
However, Wipro's announcement of a buyback of up to 343.75 million shares at Rs. 320 apiece, a substantial premium to Thursday's closing price of Rs. 269.15, is likely to boost investor sentiment on Friday.
India's top IT firm Tata Consultancy Services Ltd earlier this year announced a buyback worth up to Rs. 16,000 crore while No. 2 Infosys Ltd plans to return $2 billion to shareholders.
Wipro beat street estimates on higher revenues from banking and financial services clients to post a 1.2 percent rise in consolidated net profit to Rs. 2,083 crore in the quarter to June 30, compared with Rs. 2,059 crore a year ago.
Analysts had, on average, expected a profit of Rs. 2,029 crore, according to Thomson Reuters data.
Revenue from its core IT services segment came in at $1.97 billion, beating the company's forecast for the quarter and marking a 2.1 percent rise year-on-year.
"We expect a slight positive reaction to the revenue beat and buyback announcement, even though Q2 guidance is disappointing." UBS said in a note to clients after the results.
