Wipro shares end 1% up as investors turn cautious ahead of Q2 earnings

Shares of Wipro ended 1.06 per cent up on Wednesday as investors turned cautious ahead of the IT firm's second quarter results scheduled later for the day.

The scrip gained 1.27 per cent intraday to Rs 579.25.

The country's fourth largest software services firm is expected to report 1.5 per cent to 1.8 per cent net profit growth quarter-on-quarter (QoQ), to be announced on Wednesday.

Here is what brokerages expect on Wipro's second quarter earnings:

Motilal Oswal Financial Services

We expect revenue growth of 2.7% in constant currency terms and a negative impact of 90 bps on account of depreciation of several currencies against the USD. Revenue growth would be driven by the Healthcare and IMS verticals. The management has been expecting the Energy & Utilities vertical to start stabilizing towards the second half of financial year 2015-16.

Our PAT estimate is Rs 2220 crore, up 1.5 per cent QoQ, on account of lower margins and other income.

The recently-acquired DesignIt would also incrementally contribute to revenue growth during the quarter.

Key issues to watch for

1) Revenue growth guidance for 3QFY16 and Energy vertical.

2) Commentary on large deal wins and ramp-up schedule.

3) Comments on any incremental impact from pricing decline and rate of automation.
 
Edelweiss Securities
 
We expect Wipro to post 1.5 per cent growth, in USD terms, implying almost 2 per cent in constant currency which means slightly higher growth than low-end of guidance. We expect the company's margins to remain flat, owing to partial negative impact of wage hike but offset by favourable rupee.

While deal wins have improved, Wipro needs to up the ante in execution. Investors will keenly monitor the deal wins and order pipeline commentary, as growth remains the biggest lever for the company.

Angel Broking

Wipro is expected to post a 1.8 per cent QoQ growth to end the period at $1826 million as compared to $1794 million in the June quarter. In rupee terms, the company is expected to post a 3.8 per cent QoQ growth of Rs 12,703 crore as compared to Rs 12,238 crore in the June quarter.

On the EBIDTA front, the margins are likely to come in at 21.3% almost same as the last year. On EBIT front, the company is expected to post a 18.7 per cent as compared to 18.5 per cent in the June quarter.

We expect the Net Profit to grow 1.6% qoq to end the period at Rs 2,223 crore.

We currently have buy rating on the stock.