Wipro Q3 revenues may rise up to 3% QoQ; flattish margins likely: Analysts

IT major Wipro is expected to register revenue growth up to 3 per cent quarter-on-quarter (QoQ) to Rs 23,497 crore in the December quarter of this fiscal year (Q3FY23), in-line with the management's guidance set in the range of 0.5-2 per cent. The company is due to announce its results on Friday, January 13.
 

Higher furloughs and two-month wage hike impact, however, is likely to keep margins flattish at 15.1 per cent in Q3FY23, cautioned analysts. Profit-after-tax (PAT), meanwhile, is expected to rise up to 10 per cent QoQ to Rs 3,057 crore from Rs 2,659 crore. However, a decline of up to 7 per cent is likely on a year-on-year (YoY) basis, suggested reports from five brokerage houses.
 

On the bourses, Wipro underperformed peers as shares dropped 0.5 per cent, while TCS, HCL Technologies, and Infosys rose up to 11 per cent in Q3FY23. In comparison, the Nifty50 index surged 5.9 per cent, during the same period.
 

Key things to watch out for: Commentary on demand for Capco consulting, management commentary on new deal ramp up, employee addition, visibility on 5G going forward, and guidance for Q4FY23.
 

Here's a compilation of top brokerage estimates for Wipro’s Q3FY23 numbers:
 

Motilal Oswal

The brokerage firm believes that Wipro will clock revenue growth of 3.1 per cent QoQ to Rs 23,200 crore from Rs 20,300 crore, within the management's guidance band provided in Q2FY23, due to heightened furloughs. However, margins are likely to remain in a narrow range, owing to the two-month impact of wage hikes. 
 

Axis Securities

The brokerage firm pegs revenues growth at 2.6 per cent QoQ to Rs 23,120 crore in Q3FY23 from Rs 22,540 crore in Q2FY23, buoyed by strong deal wins. Margins, too, are expected to expand 12 bps to 24.6 per cent from 24.1 per cent, in the preceding quarter. Besides, though analysts expect PAT to grow 1.7 per cent QoQ, a decline of 8.9 per cent is likely in YoY terms to Rs 2,704 crore in Q3FY23.
 

Sharekhan

While analysts estimate Wipro's revenues to grow 3.8 per cent QoQ in rupee terms, only 1 per cent growth is likely in cross-currency terms (CC) to $2,825 million in Q3FY23 from $2,798 million in Q2FY23. EBIT margins, meanwhile, is expected to expand 17 bps QoQ to 15.3 per cent in Q3FY23, led by cost control, which was partially offset due to lower utilisation and higher furloughs.
 

Phillip Capital

Analysts peg revenue growth at 0.9 per cent in CC terms to $2,812 million in Q3FY23. Growth, they said, is likely to be impacted by higher furloughs and weakness emerging from the consulting business. Margins, on the other hand, are expected to remain flat at 15.1 per cent. Moreover, the brokerage firm anticipates Wipro to guide for nil-to-2 per cent QoQ CC growth for Q4FY23.
 

Nirmal Bang

Analysts expect total contract values (TCVs) to be lower than $725 million recorded in the previous quarter of this fiscal year. Moreover, they believe that margins have bottomed out and will not hit the medium-term target of 17-17.5 per cent in FY23 nor FY24 due to heavy investments in talent and slowdown in macro-economy. However, they assert that the moderation in attrition would continue in Q3FY23.