Wipro Q3 Results Review – Mixed Quarter With Good Delivery But Muted Guidance: Motilal Oswal

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies.

These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. Motilal Oswal Report Wipro Ltd. reported IT Services revenue of $2.

66 billion in Q3 FY24, down 1. 7% QoQ constant currency, near the upper end of its guidance and 100 bp ahead of our estimate. It reported an order intake of $3.

8 billion (flat QoQ), with large deal total contract value of $0. 9 billion (down 8. 3% QoQ).

Despite four straight quarters of revenue decline, Wipro has provided muted guidance for Q4, with USD CC revenue performance to be in the range of -1. 5% to +0. 5% QoQ.

Despite revenue growth in Q3, Wipro maintained its IT Services Ebit margin at 16. 1% (flat QoQ), ahead of our expectation of 15. 1% due to better cost control and lower employee count.

We see Wipro’s Q3 performance as positive given that the company struggled to deliver on expectation over the last few quarters due to macro headwinds. Moreover, the management commentary on higher deal wins in the consulting vertical indicates that the drag from that segment is now bottoming out, which should help improve overall growth. But we believe that Wipro’s weak Q4 FY24 revenue growth guidance is a concern, along with unchanged commentary on demand and discretionary spending.

While we expect Wipro to return to growth in FY25 after posting a decline in FY24, the weak base should result in revenue growth lower than that of peers. We expect the company to deliver a 3. 9% compound annual growth rate in IT services revenue over FY23-26.

Ebit margin stood at 16. 1% (IT service), beating our estimate by 100 bp QoQ, despite two months of wage hikes. The management remains confident of reverting to its 17% Ebit margin guidance in the medium term.

We expect Wipro to revert to this level of profitability in FY25, which should translate to an 8. 0% CAGR in Indian rupee PAT over FY23-26E. We have kept our FY24-FY26 EPS estimates broadly unchanged after its Q3 print.

We maintain our Neutral stance as we view the current valuation as fair. Our target price of Rs 520 is based on 19 times FY26E earning per share. Click on the attachment to read the full report: Motilal Oswal Wipro Q3FY24 Results Review.

pdf View Document ALSO READ Wipro Q3 Results Review – Much Better Than Worst Fears: Nirmal Bang Opinion Wipro Q3 Results Review – Much Better Than Worst Fears: Nirmal Bang Read More DISCLAIMER This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice.

For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit. Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

.