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Recommendation: Reduce
Target price: Rs400
Wipro is likely to post 2.8% sequential growth in constant currency IT services revenue during the June 2022 quarter. This growth will be largely led by healthy traction in the BFSI and Consumer verticals. On the other hand, Manufacturing and Health verticals are likely to remain soft. Lack of large deals is a key constraint for the company.
Analysts at IIFL Securities expect Wipro’s EBIT margins to contract 40 basis points sequentially, amid increased travel and facility costs and impact of 1-month revenue contribution from Rizing.
The company could guide for a 2.5-4.5% sequential growth in revenues for Q2FY23 (including two months’ contribution from Rizing).
Important management insights to watch out for:
-
Large deal wins and deal pipeline -
Q2FY23 guidance -
Impact on demand from on‐going macro concerns -
Commentary about supply side issues and attrition trends
|
June 2022 estimates |
QoQ change |
YoY change |
|
|
Revenue (US$ mn) |
2,745 |
0.8% |
13.7% |
|
Revenue (Rs. mn) |
215,098 |
3.1% |
17.8% |
|
EBIT (Rs. mn) |
34,201 |
0.5% |
8.9% |
|
EBIT margin |
15.9% |
(40) bps |
(130) bps |
|
Profit After Tax (Rs. mn) |
29,654 |
(3.9)% |
(8.3)% |
|
EPS (Rs.) |
5.4 |
(3.9)% |
(8.4)% |
Source: IIFL Research
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