Wipro is all set to report December quarter results today, post market hours. The company board would also discuss declaration of interim dividend, if any. The Thierry Delaporte-led company is seen reporting a muted 2-3 per cent YoY growth in profit on a year-on-year basis. This is even as it is expected to log 15-16 per cent growth in revenues. Margin may be under pressure, thanks to wage hikes. Analysts said the BFSI segment could be a laggard, given Wipro's higher exposure to mortgage business. The IT major is likely to give a revenue growth guidance of 0-2 per cent for the March quarter compared with 0.5-2 per cent that it gave for December quarter, analysts said.
Revenue, dollar growth CC
ICICIdirect expects Wipro to report 1 per cent sequential growth in constant currency terms. It sees dollar revenue growth at 0.7 per cent sequentially. Nuvama Institutional Equities is expecting CC revenue growth at 1.2 per cent and dollar revenue growth at 1 per cent sequentially. Emkay Global sees 0.6 per cent sequential dollar revenue growth in the IT services segment after factoring in 40 basis points cross-currency headwinds.
Profit growth
Emkay Global expects Wipro to log a 2.3 per cent YoY rise in net profit at Rs 3,037.80 crore compared with Rs 2,969 crore in the same quarter last year. Nuvama Institutional Equities, on the other hand, pegs Wipro's profit for the quarter at Rs 3,052 crore, up 2.8 per cent YoY. Motilal Oswal in fact sees profit for the quarter falling about 6.9 per cent YoY to Rs 2,800 crore.
Ebit margin
Nuvama expects Wipro to report Ebit margin at 15.3 per cent, the lowest in the tier I IT pack. Motilal Oswal expects Ebit margin to come in at 14.6 per cent compared with 14.4 per cent in the September quarter and 17.5 per cent in the year-ago quarter. Motilal Oswal Securities said margins may remain in a narrow band, given the two-month impact of wage hikes.
Capco
ICICIdirect said that Wipro’s consulting business (led by Capco) is expected to continue to witness headwinds in December quarter and noted that a few verticals like retail, hi-tech, manufacturing are likely facing headwinds during the quarter.
"Some revenues for the quarter could also be impacted by certain leadership changes during the quarter in our view. Rupee revenue is expected to grow 3.6 per cent QoQ to be aided by rupee depreciation. On EBIT margins, we expect IT services EBIT margins to expand moderately by 10 bps QoQ, as there would some wage hike impact to hit in Q3 with tailwinds being moderation of attrition, pyramid optimisation and rupee depreciation," it said.
Key things to watch
Kotak Institutional Equities expects investors to focus on the impact of recession on discretionary portfolio of the business, especially CAPCO. It said investors would want to know about the client behaviour in the current slowdown cycle versus the past and the performance of Wipro's acquired entities, noting that most are in discretionary spending areas. Besides, investors would also want to know about the annual client budgeting exercise, and the measures Wipro is taking to increase margins to aspired 17 per cent-plus level, Kotak Institutional Equities said.
Wipro would report its December quarter results after market hours i.e. after 3:30 PM IST. Wipro's results will be available in the investors section of the company’s website and well as on stock exchanges. At 7:30 pm on Friday, Wipro's senior management will discuss the company’s performance for the quarter and full year. The audio from the conference call would be available online through a webcast.
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