Should You Buy, Sell or Hold The Wipro Stock Post Quarterly Numbers?

Wipro declared its quarterly numbers on Wednesday, which were really a mixed bag. Here is what broking firm Emkay Global makes on the quarterly numbers, post which investors can decide on buying, holding or selling the stock of Wipro.

"Wipro Sep'22 Quarter results were mixed operating performance; one-off cost impacted reported overall margins and profit," the brokerage has said.

Actual vs. expectations

• Revenue beat while margins misses estimates
• Likely stock reaction to the quarterly results

Likely stock reaction

Neutral

Key positives - Broad-based revenue growth, In-line Q3 guidance; steady order book; attrition moderated by 30bps QoQ at 23%.

Result Summary

• Wipro reported revenues of USD 2.8bn, up 2.3%/8.4% QoQ/YoY (CC 4.1%/12.9% QoQ/YoY), above our expectations of 3.7% CC QoQ. (TCS Q2FY23 revenues was USD6.88bn, 4.1% CC QoQ)
• IT services EBITM expanded by ~10bps sequentially to 15.1%, 20 bps below our estimates. (TCS IT services EBITM grew ~90 bps QoQ to 24%).
• Adj. Profits at Rs26.6bn (3.7% QoQ, -9.3% YoY), vs our estimates of Rs29.5bn, due to restructuring costs (~Rs1.4bn) and lower other income.
• Company guided Q2FY23 sequential growth to be in the range of 0.5% - 2% (in-line with our expectations of 0-2%).
• Large deals booking was ~USD0.7bn TCV in Q2 and grew 42% YoY in H1. Overall order book in TCV terms grew 24% YoY in Q2.

Growth by Verticals (all in constant currency terms)

• Financial Services: 14.4%YoY ( V/s 48.7% YoY in Jun'22 quarter)
• Manufacturing: 16.7%YoY ( V/s 14% YoY in Jun'22 quarter)
• Healthcare: 8.1%YoY( V/s 12.8% YoY in Jun'22 quarter)
• Communications: 12.4%YoY (V/s 24.4% YoY in Jun'22 quarter)
• Energy: 4.9% YoY (V/s 13.5% YoY in Jun'22 quarter)
• Consumer Business Unit: 22.2% YoY (V/s 34.6% YoY in Jun'22 quarter)
• Technology: 6.2% YoY (V/s 14.5% YoY in Jun'22 quarter)

Growth by Strategic market units (all in constant currency terms)

Americas 1: 15.3% YoY ( V/s 22.2% YoY in Jun'22 quarter)
Americas 2: 12.3% YoY ( V/s 33.8% YoY in Jun'22 quarter)
Europe: 11.9% YoY ( V/s 36% YoY in Jun'22 quarter)
APMEA: 11.3% YoY ( V/s 14% YoY in Jun'22 quarter)

Manpower details

Total Headcount: 259,179, up 606 QoQ
LTM Attrition: 23%, V/s 23.3% in Jun'22 quarter and 23.8% in Mar'22 quarter