Wipro Q3: Revenue in CC terms may grow 2% QoQ; deal wins, digital biz eyed

Wipro is scheduled to release its financial results for Dec quarter today. The earnings report of the company will be keenly watched for BFSI, participation in large deals and digital growth rates.

IT firm Wipro is scheduled to release its financial results for the October-December period of FY19 today. This quarterly earnings report will be keenly watched for growth rates in energy and utilities, acceleration in banking, financial services and insurance (BFSI) and participation in large deals and digital growth rates.

The company will also consider a proposal for issuing bonus shares to shareholders in its board meeting today.

Other tier-1 IT companies such as Tata Consultancy Services (TCS) and Infosys have already announced their December quarter results.

Here’s a look at what top brokerages expect from Wipro's Q3 results today -

Edelweiss

We expect Q4FY19 revenue guidance of 1.5–3.5 per cent. Wipro is likely to post revenue growth of 2 per cent in constant currency (CC) terms (mid-point of guidance) aided by revenue from the Alight deal and strong momentum in BFSI. Reported USD revenue growth is likely to be 1.4 per cent quarter-on-quarter (QoQ) on account of cross currency headwinds (60bp). The adjusted EBITDA margin is expected to rise 90bps QoQ aided by rupee depreciation and operational efficiencies as the wage hike cycle is behind. We expect the company to guide revenue growth of 1.5–3.5 per cent for Q4FY19. Growth rates in Energy and Utilities, acceleration in BFSI, participation in large deals and digital growth rates are the key monitorables. We maintain the cautious stance and ‘HOLD’ rating.

ICICIdirect

Global IT services constant currency revenues could grow 1.7 per cent QoQ mainly led by two-month consolidation of Alight acquisition. Owing to cross-currency headwinds, IT services US dollar revenues may grow 1.3 per cent QoQ to $ 2,067 million. Consolidated revenues could grow 4.7 per cent to Rs 15,228 crore. Global IT services EBIT margins may expand 30 bps QoQ (on aan djusted basis from 18 per cent) to 18.3 per cent mainly owing to rupee benefit and operational efficiency. Investor interests would be growth outlook across healthcare and communication vertical, margin trajectory, view of FY20E from the growth perspective.

Prabhudas Lilladher

We expect Wipro CC revenue to grow 1.2 per cent QoQ. Reported USD revenues would grow by 0.6 per cent QoQ owing to cross-currency headwind. This translates to a sequential growth outlook of 1-3 per cent. Commentary on BFSI vertical, growth in the European market, large deal wins and Digital business would be keenly watched.

Sharekhan

We expect CC revenue of Wipro to improve by 2.3 per cent QoQ (adjusting reorganisation of India business) and cross-currency headwind of 70 bps on dollar revenue growth. Growth is expected to be driven by revenue contribution from the full quarter consolidation of Alight deal. EBIT margin in IT services is expected to improve by 370 bps QoQ on account of operational efficiencies, rupee benefits and absence of one-time settlement cost.

In its September quarter, the company's profit and margin figures missed Street estimates, even though it was able to meet revenue projections on the back of accretion from its recent multi-billion dollar Alight deal win. It reported a dip in its net profit with contraction in its operating margin, as it had to provide for Rs 514 crore towards a one-time settlement with one of its key clients. During the period, Wipro’s consolidated net profit fell 13.8 per cent year-on-year (YoY) to Rs 1,886 crore, while on a sequential basis, it dropped 9.9 per cent.