The bluechip IT firm is expected to report a 3-5% rise in the quarterly revenue, with some contraction in the margins on a year-on-year (YoY) basis, thus denting the profitability. The bottom line is likely to remain flat for the IT exporter, said analysts.
Management commentary on growth guidance, demand environment amid recession fears, new deals and total contract value (TCV) along with hiring activity and attrition rates would be closely tracked by investors.
The company is likely to report revenue of around Rs 22,500 crore, with a net profit of Rs 2,500-2,700 crore, suggest analyst estimates.
Wipro is likely to deliver 4% quarter-on-quarter (QoQ) CC revenue growth in 2QFY23, which is at the mid-point of their guidance range of 3-5% QoQ CC, said Jefferies.
“We expect 2QFY23 margins to expand by 20 bps QoQ, with the impact of 1-month wage hike, supply side pressure and higher travel costs, offset by pyramiding, operating leverage and some pricing benefit,” it said.
Revenue growth includes the inorganic contribution of 100 bps from acquisitions, said the global brokerage firm, which has an underperform rating on Wipro and a target price of Rs 360.
Wipro has hinted at the highest-ever pipeline and a robust demand environment, reflected in TCV growth of 30% YoY and ACV growth of 18% YoY in 1QFY23, said Nirmal Bang Institutional Equities.
“We expect margin to expand by 70 bps but remain below the guided range of 17-17.5%, owing to higher compensation and initiation of quarterly promotions. These headwinds will be offset by operational efficiencies, rupee depreciation and improvement in utilization,” it said .
There have been concerns around senior management attrition in Wipro and the market would like to be reassured that things are fine, said the brokerage firm, which has downgraded the Indian IT sector to underweight.
Wipro is expected to post a 4% QoQ revenue growth, which includes inorganic growth of 1.3% from the rising acquisition, according to Sharekhan. “We see 160 bps cross currency (CC) impact for Wipro,” it added.
Sharekhan expects Wipro’s net profit to drop 3.7% YoY to Rs 2,822 crore. It pegs revenue at Rs 22,888 crore, up 15.8% on a yearly basis. It is anticipating an OPM of 18.7%, down 289 bps.
EBIT margins are set to improve by 29 bps QoQ led by higher utilization and cost control measures, it said. Sharekhan has a hold rating on Wipro with a target price of Rs 460 on the stock.
Growth in 2QFY23E should remain within the management’s guidance band provided in 1QFY23, according to
, who expects Q3 demand commentary to stay positive. It has a neutral rating on the stock with a target price of Rs 385.
“Margin should see some improvement despite continued supply pressures,” it added. “The management’s guidance for Q3FY23 and deal wins will be key monitorables.”
It expects revenue at Rs 22,500 crore, up 4.7% QoQ and 14.6% YoY, and profit at Rs 3,000 crore, up 15.5% QoQ and flat YoY.
Axis Securities expects Wipro to report revenue growth of 4.7% QoQ in rupee terms and margin expansion of 12 bps. Key monitor cables would be the TCV/pipeline, pricing scenario, and outlook on new deals, said the brokerage.
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