Should You Buy, Sell Or Hold Wipro Stock Post Quarterly Results?

Tech major Wipro came out with its quarterly numbers on Friday. Post the quarterly numbers, Emkay Global has come out with its report. The firm believes the stock reaction could be neutral for Wipro.

IT services margin beats estimates; Q4 Guidance below expectations

Actual vs. expectations

Revenue tad below estimates while margins beat estimates

Likely stock reaction

Neutral

Key positives - Margin beat, steady order book; attrition moderated to 21.2%.

Result Summary

Wipro reported revenues of USD2.8bn, up 0.2%/6.2% QoQ/YoY (CC 0.6%/10.4% QoQ/YoY), tad below our expectations of USD2.81bn/1% CC QoQ. (TCS Q3FY23 revenues was US$ 7.07bn, 2.2% CC QoQ; Infosys revenues was US$4.66bn, 2.4% CC QoQ; HCL revenues was US$3.24bn, 5% CC QoQ)

IT services EBITM expanded by ~120bps sequentially to 16.3%, ~80 bps above our estimates, on the back of strong operational improvements and automation-led efficiencies which negated impact of salary increases and promotions. (TCS IT services EBITM grew ~50bps QoQ to 24.5%; Infosys EBITM was flat QoQ at 21.5%; HCL EBITM grew ~160bps QoQ to 19.6%).

Adj. Profits at Rs30.53bn (14.8% QoQ, 2.8% YoY), vs our estimates of Rs30.4bn.

Guidance: IT services revenue is expected to grow in the range of -0.6% to 1% QoQ CC in Q4FY23 (below our expectations of 1-3%). Company expects FY23 revenue growth to be in the range of 11.5-12% YoY in CC term.

The company has signed 11 large deals with TCV of over US$1bn in Q3. Overall order booking were over US$4.3bn in Q3, 26% YoY.

Growth by Verticals (all in CC terms)

Financial Services: 9.6%YoY ( V/s 14.4% YoY in Sep'22 quarter)

Manufacturing: 14.4%YoY ( V/s 16.7% YoY in Sep'22 quarter)

Healthcare: 8.9%YoY( V/s 8.1% YoY in Sep'22 quarter)

Communications: 6.4%YoY (V/s 12.4% YoY in Sep'22 quarter)

Energy: 10.1% YoY (V/s 4.9% YoY in Sep'22 quarter)

Consumer Business Unit: 16.8% YoY (V/s 22.2% YoY in Sep'22 quarter)

Technology: 4% YoY (V/s 6.2% YoY in Sep'22 quarter)

Growth by Strategic market units (all in CC terms)

Americas 1: 11% YoY ( V/s 15.3% YoY in Sep'22 quarter)

Americas 2: 9.4% YoY ( V/s 12.3% YoY in Sep'22 quarter)

Europe: 12% YoY ( V/s 11.9% YoY in Sep'22 quarter)

APMEA: 7% YoY ( V/s 11.3% YoY in Sep'22 quarter)