Wipro shares sink 7% after Q4 results

The stock of the company was trading lower at 6.87% to Rs 560.00 on the Bombay Stock Exchange (BSE).

The company on Wednesday said that it will buy back up to four crore shares worth around Rs 2,500 crore. Image Source:Official Website

Shares of IT major Wipro today tumbled almost 7 per cent after the company's March quarter earnings missed street expectations.

After a weak opening, the stock further plunged 6.87 per cent to Rs 560 on BSE.

At NSE, it tanked 6.92 per cent to Rs 559.60.

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The bluechip was the top loser among the frontline scrips on both Sensex and Nifty during the morning trade.

"Wipro's March quarter results have missed expectations both on growth and margins," Emkay Global Financial Services said in a report.

Wipro, India's third-largest IT firm, yesterday reported 1.6 per cent drop in March quarter profit to Rs 2,235 crore due to pressure on margins even as it aims to double revenue to USD 15 billion by 2020, while its board approved a Rs 2,500-crore share buyback plan.

The Azim Premji-led firm had registered a consolidated net profit of Rs 2,272 crore in the same quarter last fiscal.

IT services, which account for a lion's share of its turnover, saw margins drop by 10 basis points to 20.1 per cent as compared to October-December quarter and by two percentage points on year-on-year basis and were also impacted by weakness in its financial and healthcare services business.

The company board also approved a share buyback for Rs 2,500 crore. Wipro will buy up to 4 crore shares, representing 1.62 per cent of the total paid-up capital, at Rs 625 apiece.

The company is looking to double its turnover to USD 15 billion by 2020 as it focuses more on digital and automation under the new management team.

It closed 2015-16 fiscal with about USD 7.7 billion in annual revenues. During January-March quarter, Wipro's revenue rose 12.9 per cent to Rs 13,741.7 crore.

Kotak Securities Senior Vice-President and Head of Private Client Group Research Dipen Shah said the revenues matched up with expectations but margins were below our expectations.

"Client-specific challenges in BFSI impacted growth while energy vertical continued to witness headwinds. The revenue guidance for Q1 indicates marginal growth on an organic basis, which is disappointing," he added.

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