 "Wipro")
IT major Wipro’s September quarter (Q2FY24) revenue (rupee terms) is unlikely to see any significant growth from the June quarter, while it may rise just 1.34 per cent from a year-ago, as per analyst estimates.
In constant currency (cc) too, the company is expected to lag peers with revenue seen declining for the third time by 0.5 to 1.2 per cent on a QoQ basis, as against the guidance of -2 per cent to 1 per cent.
As per an average of 7 brokerage estimates, Wipro’s Q2 profit may rise 11.3 per cent YoY to Rs 2,959 crore. This will be a growth of around 3.1 per cent from the June quarter. SEE TABLE
Revenue is pegged to rise 1.34 per cent YoY to Rs 22,842 crore. This will be nearly flat against the June quarter.
The company’s EBIT margin, meanwhile, is seen expanding between 20-110 basis points sequentially to as much as 16.4 per cent due to delayed wage hikes. The margin was 15.1 per cent for the June quarter.
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Key monitorables: Investors will closely track Q3FY24 guidance. Reasons for lag in growth rates versus peers will be watched out for. Commentary on large deal-wins, senior management exits, outlook for the consulting business, tech spending in BFSI, cause for divergence in revenue growth and reported deal bookings and margin levers will be awaited.
Here’s what brokerages say:
Motilal Oswal Financial: Expect Wipro to report a cc revenue decline of 1.2 per cent QoQ due to growing intensity of adverse macroeconomic conditions, leading to demand softness in verticals beyond BFSI and consumer.
Consulting business is expected to be weak owing to cut down in discretionary spends and reprioritizing of projects.
HSBC: Revenue growth is assumed to be at the midpoint of Q2 guidance with cc decline of 0.5 per cent. We expect margins to be range bound, however we build in a slight expansion of 20 bps due to delay in wage hikes. It should benefit from the absence of seasonal costs of Q1 as well.
JM Financial: We expect Wipro to guide for a 0-2 per cent cc QoQ growth for the December quarter. A 0.8 per cent cc revenue de-growth for IT services is expected in Q2. EBIT margins will be stable at 16 per cent as we expect lower revenues to be offset by on-going efficiency.
Kotak Institutional Equities: See a QoQ decline of 0.6 per cent in cc revenue for Wipro on broader weakness in financial services and high exposure to consulting services. Wipro may guide for revenue decline of 1 per cent to growth of 1 per cent for Q3. It will likely report the weakest growth among IT companies for Sept quarter.
IT services’ EBIT margin will be largely stable at 16.1 per cent as the company undertakes cost optimization measures.
IIFL Securities: Expect revenue to decline 1 per cent in cc terms on a QoQ basis, closer to the lower end of the company’s guided range. IT services Ebit margins are expected to remain flat QoQ, as decline in revenues is offset by productivity improvements. Wipro could guide 0-2 per cent cc QoQ growth for Q3.
