Wipro Q3 Results Preview: Revenue Likely To Fall Compared To TCS, HCL, Infosys; Stock Price Plunges

Azim Premji-backed tech company, Wipro witnessed selling pressure ahead of Q3 results for FY25 on Friday, January 17, 2024. The stock plunged more than 2% on BSE and was also among the top underperformers on the day. In the third quarter, Wipro's revenue is expected to decline, while EBIT margins are seen to be stable. The ramp-up in large deals will be offset by seasonal weakness in the quarter.

Wipro Share Price:

At the time of writing, Wipro shares stood at Rs 282.15 apiece, down by 2.05% on BSE with a market cap of Rs 2,95,406.44 crore. The stock was near its day's low of Rs 282 apiece. The stock's 52-week high and low is at Rs 319.95 apiece and Rs 208.40 apiece respectively.

Wipro Q3 Results Preview:

Brokerage IndSec expects Wipro to report cc qoq growth decline between -1% to -0.5%. This is on the back of seasonal weakness in consulting, client-specific issues in ENU, weakness in Manufacturing, furloughs & currency headwinds. Further, the brokerage expects the company's EBIT margins to drop by 22bps qoq on account of weak topline growth, wage hikes impact (50bps).

IndSec expects positive 4Q revenue growth band from the management. Large deal wins to be around $1.2 -1.4bn. Notably, senior management attrition, Margin levers for 17%+ aspiration & Assessment of New CEO strategy steps will be the focus areas.

Meanwhile, Kotak Institutional Equities said, "We expect a revenue decline of 0.6% on an organic c/c basis due to the seasonal weakness in consulting and furloughs that will offset benefits from the ramp-up of some of the large deals. We expect stable EBIT margins of 21.2%. There are no particular headwinds or tailwinds in the quarter."

Also, Kotak's note said, "We expect large-deal TCV of US$3 bn, up qoq but down yoy. The focus will be on ACV of deal wins. We expect Infosys to raise FY2025E revenue growth guidance to 4.5-4.75% from 3.75-4.5%. The guidance implies a 0.7% decline at the lower end and +0.2% at the upper end of the guidance band. We expect the company to retain the 20-22% EBIT margin guidance band."

For investors, key focusing factors should be --- (1) the state of discretionary spending across verticals, especially in financial services, (2) the outcome of the annual budgeting exercise of clients, (3) senior management attrition, (4) the margin levers and wage hike announcement cycle and (5) the composition of revenues, i.e., revenues from the sale of third-party items, as per Kotak.

During Q2FY25, the company reported consolidated net profit of Rs 3,209 crore (attributable to owners), registering a growth of a whopping 21.25% year-on-year and 6.85% quarter-on-quarter. Meanwhile, consolidated revenue came in at Rs 22,301.6 crore in Q2FY25, however, declining by 0.95% from PAT of Rs 22,515.9 crore in Q2FY24. In dollar terms, the company's IT services segment revenue was at $2,660.1 million, an increase of 1.3% QoQ and a decrease of 2.0% YoY.

For the quarter ending December 31, 2024 period (Q3FY25), Wipro has announced a forecast for its revenue growth in the IT Services business segment which it expected to be in the range of $2,607 million to $2,660 million. This translates to sequential guidance of (-) 2.0% to 0.0% in constant currency terms.