Kawaljeet Saluja

Kawaljeet Saluja asked about Wipro's plans for its $6.5 billion excess cash, specifically if it would be through dividends or buybacks, and if buyback is an option, what considerations are needed. He also asked Aparna Iyer and Srinivas Pallia what the March quarter guidance would have been if the two mega deals' ramp-ups were not delayed, either quantitatively or qualitatively.

Answer

Aparna Iyer (CFO, Wipro) confirmed that Wipro has excess cash and has increased dividend payouts (INR 11 per share this year, ~88-89% of YTD EPS) to avoid adding to it. She stated that buyback is indeed an option, with no current statutory impediments, and will be discussed with the board, considering net cash availability for investments. Regarding the delayed mega deals, Aparna Iyer stated that Wipro cannot provide quantitative details but qualitatively explained that these ramp-ups are only delayed, not canceled. She noted that some deals ramped up perfectly, while others are taking longer due to client situations or the inherent multi-quarter nature of the ramp-up.

Kawaljeet Saluja from Kotak Institutional Equities inquired about Wipro's strategy for utilizing its $6.5 billion excess cash, specifically asking if it would be through dividends or share buybacks, and the considerations for pursuing a buyback. He also asked for a qualitative or quantitative assessment of what the March quarter guidance would have been if the ramp-up of two mega deals had not been delayed.

Answer

Aparna Iyer, CFO, stated that increased dividend payouts (over $1.3 billion this year) are being used to manage excess cash while retaining funds for acquisitions. She confirmed that a share buyback remains an option, with conducive statutory conditions, and will be discussed with the board. Regarding delayed mega deals, she could not quantify the impact on guidance but explained that some deals ramped as planned, while others, particularly vendor consolidation deals with new elements, are experiencing delays due to client situations or their multi-quarter ramp-up nature.

Kawaljeet Saluja asked if Wipro's underperformance in verticals like Manufacturing and E&U is due to market share loss amid vendor consolidation. He also probed for details on any one-off items affecting margins in the quarter and what kind of business environment is required for Wipro to reach its aspirational margin band.

Answer

CEO Srinivas Pallia asserted that Wipro is actively winning in vendor consolidation exercises, viewing it as a significant opportunity. CFO Aparna Iyer acknowledged some one-off financial items but clarified that the primary driver of margin improvement was at the gross margin level, not from SG&A. She stated that to sustainably surpass the 17-17.5% operating margin target, an improved revenue growth environment would be necessary.