TCS was the first company to beat road estimates and exceed expectations on most fronts. net profit of the company 100 billion figure for the first time.
In the financial year 2012, TCS made a net profit of 105 billion TCS is currently reporting 100 billion profit in a single quarter! let it sink in…
For HCL Tech too, the results were above estimates and the company’s margins showed improvement. The highlight was that it gave full year guidance for margins.
This leaves us with Wipro.
Wipro’s results have not been so good and its impact is already visible on its share price.
Wipro shares fall 5.7 per cent to 52-week low Last week 383.
He is not everything. Wipro’s share price has been under pressure in 2022.
Let’s find out why this can happen…
Wipro’s September quarter results were mixed
Last week, Bengaluru-based Wipro reported 14.6 per cent growth in revenue for the September 2022 quarter 225.4 billion
On a year-on-year (YoY) basis, the company’s net profit fell by 9.3% Net profit was lower due to increased spending for 26.6 billion employees and a decrease in non-US income.
The company’s operating margin in the IT services segment grew 16 basis points sequentially to 15.1%.
CFO Jatin Dalal said,
After absorbing the impact of pay increases and promotions, we achieved a margin of 15.1% in the second quarter.
Our margin improvement was driven by improved value realizations and strong operational improvements in productivity led by automation.
Attrition dipped a bit, which is good. Voluntary exodus came in at 23%, down from 23.3% in the previous quarter. With this, Wipro recorded moderation for the third consecutive quarter in attrition.
A worrying highlight was its sluggish guidance for the December 2022 quarter, where Wipro is expecting a 0.5-2% sequential growth in revenue.
Another worrying point for Wipro is that the margins have been declining steadily for the past eight quarters. This may be due to recent acquisitions, which have led to a major reset on gross margin levels.
Other factors behind Wipro’s freefall in 2022
Wipro shares fell 5 per cent today on poor quarterly results. But if we take a longer horizon, the share price of Wipro has fallen in 2022 due to other reasons.
to name a few, Indian IT stocks have experienced sharp decline in 2022, partly because of concerns about a prolonged slowdown in US IT spending.
As the US Federal Reserve intensifies its fight against decades of high inflation, a growing number of economists predict a US recession within the next 12 months.
Another reason is the high attrition rate. Most Indian IT firms reported employee mortality rates of over 20%.
Wipro is facing a tough time in addressing this issue and thus has resulted in increase in employee cost which has ultimately affected the financial numbers of the company.
Indian IT companies are also worried that budget tightening for slowdown-hit US and European customers will have a huge impact on their own profits in the aftermath of the pandemic boom.
A few months back we wrote to you why Wipro is under pressure and explained these reasons in detail. You can check it out here: Why is the share price of Wipro falling?,
Equitymaster’s Technical View on Wipro
We contacted Brijesh Bhatia, Editor of Premium Recommendation Services fast profit reportWhat does he have to say about Wipro?
Here is Brijesh:
As the company announced its quarterly results yesterday, the stock opened lower and is trading down more than 5% today.
I am not looking into the results update and the reasons for Wipro’s fall, but if we look at it from a technical angle, the stock is trading on a thin ice level.
Wipro Technical Chart
The stock is trading down 5% and most of the result traders exited their positions in the first tick highlighted by the volume bar.
Similar volume was observed at the opening tick on July 21, 2022, and the price action reversed north. The only difference between the two bars is the closure of the bar.
The bar near July 21 was high while today’s bar is near low.
Interestingly, today there was no follow-up sale after the first 10 minutes of opening.
According to the Volume-Spread Analysis (VSA) theory, the bar with the highest volume acts as support and resistance for further momentum.
In the previous volume bar, low set the tone for the faster pace. Momentum above 400 will decide the strength of today’s opening bar.
How did Wipro perform in 2022?
Wipro share price hits 52-week high 739.8 touched on 14 October 2022 and 52-week low of Last week touched 383.
Wipro Shares Have Fallen Up To 46% So Far In 2022!
Here is a table comparing Wipro with its peers.
comparative analysis
| company | Wipro | TCS | Infosys | HCL Tech | Tech Mahindra |
| ROE (%) |
20.5 |
44.1 |
29.4 |
22.2 |
22.1 |
| ROCE (%) |
21.8 |
60.2 |
40 |
26.6 |
26.5 |
| Latest EPS (Rs.) |
21.1 |
106 |
52.9 |
50 |
54.9 |
| TTM PE(X) |
19.4 |
28.9 |
27.4 |
19.1 |
18.6 |
| TTM price to book (x) |
3.3 |
11.4 |
7.6 |
4 |
3.6 |
| dividend yield (%) |
1.5 |
1.4 |
2.1 |
4.4 |
4.4 |
| Industry PE (X) |
26.1 |
||||
| Industries Punjab (x) |
6.7 |
||||
Data Source: Ace Equity, Equitymaster
About Wipro
Wipro is one of the leading global IT, Consulting and Business Process Services companies.
Wipro was incorporated in 1945 as Western India Vegetable Products Limited. It was a consumer care product manufacturer until 1980 after which it diversified into the IT services business.
With effect from 1 April 2012, the company separated its other divisions (consumer care and lighting, medical equipment, and infrastructure engineering) into a separate company called Wipro Enterprises Limited (WEL).
Wipro’s operations can be broadly classified into IT Services, IT Products and India State Run Enterprise.
Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated from equitymaster.com
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