Wipro’s earnings during the third quarter of FY2023 were mixed as the company’s top-line front exceeded expectations related to profits and operating margins. Another positive is that Wipro continued to report a fourth consecutive quarter of reduction in attrition rates, however, it reduced its workforce in the third quarter. Also, the company declared the lowest dividend as compared to peers in Q3. After the third quarter results, most experts are bullish on Wipro shares and have given buy recommendation.
wipro The stock will be in focus on Monday after the third quarter prints. Shares of the company on Friday last week 393.65 broadly flat on BSE. The company’s market cap is around 2.16 lakh crore till 13 January.
during Q3FY23Wipro earned a consolidated net profit of Rs. 3,052.9 crore by 2.8% QoQ and 15.24% YoY. consolidated revenue came in 23,229 Crore growing by 3.06% QoQ and 14.35% YoY. In dollar terms, IT Services segment revenue grew 6.2% YoY to $2,803.5 million, while non-GAAP constant currency growth stood at 0.6% QoQ and 10.4% YoY. Furthermore, IT services operating margin for the quarter improved by 120 bps QoQ to 16.3%.
In addition, during the third quarter, the Azim Premji-backed company reported a 26% increase in total bookings and a 69% increase in large deal bookings. In addition, the company’s attrition rate decreased for the fourth consecutive quarter in the third quarter to 21.2%. However, Wipro reduced its workforce by 435 sequentially to take the total workforce to 258,744 by December 31, 2022.
Additionally, the company declared an interim dividend of Re 1 per equity share for the financial year FY23. To determine the eligible shareholders, the company has set January 25 as the record date, while the payment is expected on or before February 10, 2023.
Wipro expects FY23 revenue growth in the range of 11.5-12% YoY in CC term.
Mitul Shah – Head of Research at Reliance Securities said, “Wipro’s revenue was broadly in line with our expectations, while its margin exceeded our expectations. Its restructuring efforts, which included a simplified operating structure, a move to upgrade efficiencies and Talent is involved. Management under new leadership augurs well for Wipro in the medium term. TTM slippage has also started falling in favor of margin expansion. We currently have Buy rating on WPRO.
In its research note dated January 14, ICICI Direct on Wipro said, “Wipro reported weak Q3 results on the revenue front. IT services grew 0.6% QoQ in CC terms and 0.2% QoQ in dollar terms.” IT Services EBIT margin improved by 120 bps QoQ to 16.3% Reported TCV of US$4.3 billion (bn), up 26% YoY.
What should investors do?
According to ICICI Direct, Wipro’s share price has increased by ~1.6 times in the last five years from 245 in January 2018 393 level in January 2023).
Thus, the brokerage has changed its rating on the stock to ‘Buy’ from ‘Hold’. It said, “We value Wipro 455 i.e. 16x P/E on FY25E EPS.
ICICI Direct also highlighted key triggers for future price performance in Wipro. these:
TCV for the quarter was US$ 4.3 billion. stability of the same in
Revenue visibility for FY24 will likely be provided in the coming quarters
Company announces major leadership changes in Americas focus areas
– Middle East, Japan and Australia and regions likely to drive revenue growth
Higher penetration, customer mining, new logo acquisition and digital revenue traction in Europe to further drive revenue growth
Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.
Know your inner investor
Do you have guts of steel or are you a victim of insomnia regarding your investments? Let’s define your investment approach.
catch all business News, market news, breaking news events and breaking news Update on Live Mint. download mint news app To get daily market updates.