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Wipro forecasts weak revenue growth after better-than-expected third-quarter profit

The company predicts revenue to grow 2% at best in January-March

Bengaluru-based Wipro has been grappling with slowdown across industries -- financial services, telecommunications, healthcare, and energy.   © Reuters

MUMBAI (NewsRise) -- Wipro reported a better-than-expected 30% jump in third-quarter net profit, but India's fourth-largest software exporter forecast another quarter of weak revenue growth amid slowing demand from U.S. healthcare clients.

The company predicted its revenue to grow 2% at best or remain unchanged at worst in January-March. Wipro ended last fiscal year with a 4.6% increase in revenue at $8 billion.

Wipro, backed by billionaire Azim Premji, has been trapped in a low-growth mode over the past few years as insolvencies at clients, slowing U.S. business, and declining revenue from its core information technology services cast a pall over its financial performance.

For the quarter ended in December, Wipro's net profit stood at 25.10 billion rupees ($353 million), compared with 19.31 billion rupees a year earlier, the company said in a statement. Analysts were expecting a net income of 23.25 billion rupees, according to Refinitiv data. Revenue grew more than 10% to 150.6 billion rupees.

Bengaluru-based Wipro has been grappling with slowdown across industries -- financial services, telecommunications, healthcare, and energy -- one after the other since the global financial crisis of 2008. An escalating trade row between the U.S. and China and fears of Britain exiting from the European Union without a trade deal have now stirred fears of a global slowdown that will cap the technology investments by clients.

In the past, spending in the financial services sector had been sagging as most banks in the U.S. were wary of outsourcing, while regulatory changes that raised hopes of more outsourcing deals remained elusive.

Wipro's weakness contrasts with the strong performance of larger rivals Tata Consultancy Services and Infosys. TCS, India's largest software exporter, earlier this month predicted double-digit revenue growth for this fiscal year, while second-ranked Infosys raised its revenue growth outlook to 8.5% to 9%.

A slow pace of transition to new digital technologies such as artificial intelligence and cloud computing, and declining investments in traditional software maintenance business further deepened Wipro's woes. Wipro brought about in a leadership change in February 2016, appointing industry-veteran Abidali Z. Neemuchwala as the new chief executive.

On Friday, the company issued one bonus share for every three held and also offered an interim dividend of one rupee a share.

Shares of Wipro gained 2.9% in Mumbai trading, while the benchmark S&P BSE Sensex closed little changed.

--Dhanya Ann Thoppil

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