Wipro sees low growth in second quarter, cautions on Brexit

By Anya George Tharakan

BENGALURU (Reuters) - India's third-largest software services exporter Wipro (WIPR.NS) forecast muted revenue growth in the current quarter and warned Britain's decision to leave the European Union could lead some customers to defer business over the medium term.

Wipro said on Tuesday it expected revenue to grow by between 0.1 percent and 1 percent in the three months ending September, compared with the proceeding three months, as clients switch to automated processes and digital solutions.

Wipro is also "fundamentally changing" its business model in India and Middle East, where it is facing headwinds, it said, without elaborating.

Chief Executive Officer Abidali Neemuchwala told reporters at a press conference that Britain's decision to quit the EU "could delay some discretionary spend and create some slowdown in the European financial services sector."

Brexit has created uncertainty for Indian outsourcing firms, including Tata Consultancy Services (TCS.NS) and Infosys Ltd (INFY.NS), that rely on financial services clients in the region for business.

Wipro's net profit for the quarter to June 30 was 20.52 billion rupees ($305.66 million), compared with 21.92 billion rupees last year. Analysts had expected a profit of 21.71 billion rupees, according to Thomson Reuters data.

Total income rose 11 percent to 136.98 billion rupees.

Analysts warn low revenue guidance for the current quarter means Wipro will struggle to post a double-digit percent rise in revenue in the current fiscal year.

"Revenue performance in top clients continues to be disappointing with top 5/10 clients declining for several quarters in a row," Mumbai-based analyst Emkay Research said in a note after the results.

Emkay's current revenue growth estimate for Wipro in the fiscal year ending March is 10.5 percent.

"Wipro remains our least preferred pick in the tier I space," the note added.

($1 = 67.1000 Indian rupees)

(Additional reporting and writing by Aditi Shah; Editing by Sherry Jacob-Phillips and Mark Potter)