You are here: Home » Markets » News
Business Standard

Wipro slips 5% as Q3 earnings fail to meet market expecatations

IT services EBIT margin declined 60 bps QoQ to 17.1 per cent vs. 17.7 per cent last quarter.

Buzzing stocks | Wipro | Wipro results

SI Reporter  |  Mumbai 

Photo: Shutterstock

Shares of slipped 5 per cent to Rs 657.15 on the BSE in Thursday’s intra-day trade after the company fell short of market expectation, as it’s net profit was up 1.3 per cent on a quarter on quarter (QoQ) basis at Rs 2,969 crore for the third quarter ended December 2021 (Q3FY22).

IT services revenue increased 3 per cent QoQ in constant currency (CC) while dollar revenues were up 2.3 per cent QoQ to US$2,639 million. Rupee revenues were at Rs 19,974 crore, up 3.1 per cent QoQ. IT services EBIT margin declined 60 bps QoQ to 17.1 per cent vs. 17.7 per cent last quarter. IT margins were lower than expected due to higher-than-expected increase in employee expenses and SG&A expenses.

The company’s operating performance was disappointing as revenues as well as margins came below our expectations. The supply side challenges will continue for couple of quarters, which would put pressure on margins. The demand outlook continues to be strong as clients continue to spend on new technologies, ICICI Securities said in a note.

While we are not concerned about the miss in Q3 given the high base of Q2 as well as the seasonal impact, the Q4 revenue growth guidance of 2–4 per cent QoQ also missed our estimate (coming in at 3.9 per cent QoQ), Motilal Oswal Financial Services said.

Given the strong performance by over the last few quarters, along with positive demand commentary from the management, the guidance was underwhelming and would act as a drag on near-term share price performance. In our view, this should be partially compensated by the continued robustness in Wipro's margins, which are ahead of its guidance of 17–17.5 per cent, the brokerage firm said in result update.

At 09:19 am; traded 4 per cent lower at Rs 664.65 on the BSE, as compared to 0.18 per cent rise in the S&P BSE Sensex. In the past six months, the stock outperformed the market by surging 25 per cent, as against a 16.8 per cent gain in the benchmark index, while in the one year; it rallied 44 per cent, as compared to 23.5 per cent surge in the Sensex.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, January 13 2022. 09:31 IST