Mr. Mitul Shah - Head of Research at Reliance Securities.
Wipro reported a decent performance in 4QFY22 with IT services EBIT margin coming in at 17%, 17bps below our estimate of 17.1%.
# IT Services - Revenue grew by 3% QoQ/28% YoY CC in USD to US$2.7bn, in line with our estimate of US$2.7bn (consensus US$2.7bn). Sequential constant currency growth came in at 3.1% vs. our estimate of 3%. (consensus 3.5%)
# IT Services - EBIT de-grew by 1% QoQ (up 5% YoY) to Rs35bn while EBIT margin stood at 17% (down 60bps QoQ /down 405bps YoY), 17bps below our estimate of 17.1% and 44bps below consensus estimate of 17.4%, impacted by higher employee cost.
# Its net income stood at Rs30.8bn (up 4% QoQ/ up 4% YoY), 2.6% higher than our estimate of Rs30.1bn, while adjusted margin came in at 14.9% vs. our estimate of 14.6%, benefitted from lower tax rate at 17.1%.
# The company has guided revenue from IT Services business to be in the range of US$2,748mn to US$2,803mn, translating to a sequential growth of 1% to 3%.
Our View: Wipros' revenue was broadly in line with our expectations while margins were slightly below our expectations. Recent restructuring efforts, which include simplified operating structure, step-up in capability upgrade and talent management under new leadership bode well for Wipro in the medium-term. However, supply challenge and wage hike would be key challenge to maintain margins over near term. At present we have a BUY rating on WPRO with a 12-M target price of Rs720, valuing the stock at 25x FY24E earnings.
Shares of Wipro Limited was last trading in BSE at Rs. 509.00 as compared to the previous close of Rs. 522.55. The total number of shares traded during the day was 522735 in over 16637 trades.
The stock hit an intraday high of Rs. 530.00 and intraday low of 507.25. The net turnover during the day was Rs. 268743367.00. |
