Domestic stocks kicked off trading on a firm note on Tuesday, following China’s President Xi’s comments on opening up of the second largest economy by lowering of foreign ownership restrictions in sectors such as automobile, shipping and aviation sectors.
The news eased worries over trade war between US and China and triggered rally across Asian markets. Domestic indices were no exception.
WiproNSE -1.21 % lost nearly 2 per cent early on Tuesday after the IT firm said its profitability may be impacted by 65-75 basis points in the March quarter as one of its telecom clients is undergoing insolvency proceedings.
The scrip was trading 1.97 per cent down at Rs 279 at around 9.20 am. India’s third-largest IT firm opened at Rs 278.80 and touched high and low of Rs 280.75 and Rs 278.70, respectively, so far.
Benchmark Sensex was up 90 points, or 0.26 per cent, at around the same time.
Without naming the client, Wipro said it had signed a multi-year outsourcing services agreement with a telecom services provider in India in 2008, which was subsequently renewed in 2013.
Telecom operator Aircel on February 28 had said it had filed for bankruptcy as it had been facing “troubled times” in “highly financially stressed” industry.
“On February 28, 2018, the client filed a petition to initiate its Corporate Insolvency Resolution Process (CIRP) with the National Company Law Tribunal (NCLT),” Wipro said in a BSE filing.
Urmil Shah of IDBI Capital told : “We expect the Aircel issue to have negative impact on EBIT margin by about 80 bps.”
Wipro added that it subsequently submitted its claim on March 28. Since then, the company has been engaged with the Insolvency Resolution Professional (IRP) to discuss the potential outcome of the process.
“It is estimated that this development will have an impact on both revenue and profitability. The company is likely to see an impact on profitability at the net income level in the range of 65-75 basis points of the consolidated revenues for the quarter ended March 2018. The impact of this client insolvency petition will reflect in the financial results of the company for the quarter and year ended March 31, 2018,” Wipro said in a BSE filing.