Wipro announces up to $1.7 billion share buyback as second-quarter forecast disappoints

Wipro Chairman Azim Premji in front of the new logo of the company. Image Source: IANS

Wipro Ltd, India`s third-largest software services exporter, announced an up to 110 billion rupee ($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.

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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 320 rupees apiece, a substantial premium to Thursday`s closing price of 269.15 rupees, 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 160 billion rupees while No. 2 Infosys Ltd plans to return $2 billion to shareholders.

Wipro beat street estimates on higher revenes from banking and financial services clients to post a 1.2 percent rise in consolidated net profit to 20.83 billion rupees in the quarter to June 30, compared with 20.59 billion a year ago.

Analysts had, on average, expected a profit of 20.29 billion rupees, 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.($1 = 64.3700 Indian rupees)

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)

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