Wipro Q1 Results Today: Wipro, the fourth largest Indian IT services company, will be reporting its earnings for the first quarter of fiscal 2024 on July 13, 2023. The IT firm is likely to report an 18-20 per cent year-on-year (YoY) rise in net profit for the June quarter on a single digit rise in sales. Margins are seen falling sequentially. Investors may look for reasons for a lag in growth rates versus peers and steps that Wipro is taking to turn around.
Weak demand continues for Wipro in Q1FY24 with technology and BFSI verticals more impacted due to macro weakness. Meanwhile, TCV to revenue conversion is progressing well and deals are ramping up as per the company’s plan, analysts said.
Wipro’s revenue growth is expected to remain muted and within the guidance range of 1-3 per cent decline QoQ in CC terms.
Revenue & Profit
The company is likely to report around 1.6 per cent sequential decline in revenue in constant currency terms for the IT services segment at around Rs 23,000 crore in Q1FY24 given the continued weakness in its banking and consulting business.
Kotak Institutional Equities pegs Wipro’s profit at Rs 3,047.50 crore, up 18.9 per cent YoY. It expects sales to rise 6.4 per cent YoY to Rs 23,021 crore. It sees constant currency (CC) revenue to decline 1.6 per cent sequentially.
The decline would be in line with the guidance band of 1-3 per cent revenue decline.
“We attribute the decline to broader weakness in financial services and high exposure to consulting services. Yoy growth rate will slow down to a trickle. The revenue decline will have corresponding impact on margins. We forecast 20 bps qoq decline even as margins will likely increase on YoY comparison. We expect reasonable TCV led by mid-size cost focus led deals. ACV would be under pressure,” Kotak said.
CC Revenue
Emkay Global expects Wipro to guide flat (minus 1 per cent to 1 per cent) CC QoQ revenue growth for Q2FY24. The brokerage sees Wipro’s Q1 profit at Rs 3,091 crore, up 20.6 per cent YoY or 0.5 per cent sequentially. It sees dollar revenues at $2,783 million, up 1 per cent YoY but down 2 per cent sequentially. Ebit margin is seen at 16.1 per cent, down 10 basis points QoQ but up 130 basis points YoY.
Deal Wins
“Deal pipeline during the quarter has remained at similar levels as previous quarter. Pipeline to TCV conversion is slowing and the nature of deals has shifted to cost take out deals,” said ICICI Securities.
Margins
Wipro’s margins are expected to be subdued in Q1FY24 due to muted revenue growth. The company’s IT Services’ EBIT margin is likely to remain flat at 16.2% sequentially.
“BFSI and Tech remain under pressure, while utility is doing good. Revenue growth is expected to remain muted and within the guidance range provided in 4QFY23. Margins should remain under pressure, due to weak revenue performance. Consulting should remain soft and clients continue to cut discretionary spending,” said Motilal Oswal Financial Services.
Management Outlook
The management commentary on FY24 revenue and margin outlook and demand trends in key verticals like BFSI, Consumer, Manufacturing, Healthcare, and E&U would be key monitorables.
Moreover, consulting business outlook and margin implications, while attrition and hiring plan along with deal intake, leaky bucket update, and any change in the deal pipeline’s composition in terms of cost takeouts will also be watched out for.
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