Wipro's Headwinds And Tailwinds: Q3 Results Decoded; Here's What Investors Should Know!

Wipro's share price will react to Q3 numbers for FY24 on Monday. Chances are the stock may trade in a volatile to cautious tone after a seasonally soft quarter. Wipro's PAT was a mixed trend, while revenue took a huge hit, however in the guided range of street's estimates. Wipro sees fluctuations in its constant currency revenue growth in Q4 of FY24.

During the third quarter of FY24, Wipro registered a consolidated net profit, attributable to owners, to Rs 2,694.2 crore, down by 11.75% YoY but up by 1.81% QoQ. Meanwhile, rupee revenue came in at Rs 22,205.1 crore in Q3FY24, registering a drop of 4.41% YoY and 1.38% QoQ. In constant currency, the IT Services segment revenue decreased by 1.7% QoQ.

However, in the quarter, the company's voluntary attrition rate has continued to moderate QoQ, coming in at a 10-quarter low of 12.3% in Q3'24. While Wipro's order booking stood to the tune of $3.8 billion with 14 large deal wins.

Further, for Q4FY24, Wipro said it expects revenue from its IT services business segment to be in the range of $2,615 million to $2,669 million. This translates to sequential guidance of -1.5% to +0.5% in constant currency terms.

Apart from this, the Azim Premji-backed company has announced dividends for equity shares and American depositary shareholders. On January 12, Wipro declared an interim dividend of Rs 1 per equity share/ADS. In percentage terms, the dividend payout is 50%.

Here's what investors should know about Wipro's earnings and growth outlook ahead of the stock price trade on Monday.

Dhruv Mudaraddi, Research Analyst, Stoxbox said that Wipro's Q3FY24 results reflect a sequential CC revenue contraction of 1.5%, falling within the guided range of -2% to +1%, primarily owing to lower services income stemming from weaknesses in the BFSI and Hi-tech verticals and furloughs during the quarter, along with challenges in the consulting business. Further, the company mitigated headwinds from wage hikes and furloughs to report an expanded EBIT margin QoQ.

Further, he highlighted that the headwinds were offset by lower subcontractor, visa, and travel costs and operational efficiency. Deal bookings were also healthy during the quarter with 14 deals of value of more than USD 30 mn. Looking ahead to Q4FY24, Wipro has given sequential guidance for revenue of -1.5% to +0.5% in constant currency terms.

The company's ongoing investments in people, processes, and business operations have started to yield positive results which will continue going forward, in Mudaraddi's view.

Notably, Wipro is witnessing a return to growth in its lucrative Consulting business, as evidenced by double-digit growth in order bookings in the Capco business. Mudaraddi added, "The company's ai360 strategy, embedding AI across solutions and client offerings positions it favourably to capitalize on emerging opportunities when the macro environment improves. Based on the above factors with additional support from an improving global economy we remain positive on the company's prospects."

As Wipro announced its Q3 after market hours of January 12, the stock price ended at Rs 465.45 apiece, up by 3.9% on BSE with a market cap of Rs 2,43,167.25 crore.

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