Wipro share price gained over half a per cent to Rs 698.50 apiece on Tuesday, a day before October-December quarter earnings release. Even as the stock has fallen nearly 3 per cent in the last five days and 3.24 per cent so far this year, it has delivered returns of 8 per cent in the last one month and 32.25 per cent in six months. However, the stock has rallied over 55 per cent in one year. Wipro is likely to post up to 5 per cent revenue growth in constant currency terms in October-December quarter of FY22, said analysts. The company will release its quarterly earnings along with Tata Consultancy Services (TCS) and Infosys on Wednesday. Nifty IT index has also gained nearly one per cent intraday led by HCL Technologies, Coforge, Mindtree, Infosys, Tech Mahindra, Wipro, which were up in the range of 1-4 per cent.
Wipro Q3 results preview: Here’s what to expect from earnings
Prabhudas Lilladher: The domestic research firm expects Wipro to guide for 2-4% QoQ CC revenue growth for Q4FY22. It said that Wipro’s margins are likely to decline by 50 bps sequentially due to full quarter impact of wage hike which was rolled out in September for mid and junior levels, impact of attrition and lower utilisation. The research firm said that investors should focus on commentary on revenue growth accelerating to levels of larger peers; large/mega-deal pipeline; growth in large accounts; commentary of large deal pipeline; measures to tackle supply side challenges and defend margins; and IT spend budgets for CY22E.
Motilal Oswal Financial Services: The research and brokerage firm expects revenue growth to remain strong with some impact from furloughs. It also sees an impact on margin due to higher attrition and employee costs. The key focus areas would be 4QFY22 guidance and deal wins. “Employee addition momentum will continue but taper a little bit,” it said.
Nirmal Bang: It has estimated 5% CC QoQ revenue growth in the third quarter of the current fiscal. It is likely that Wipro may maintain guidance of 2-4% QoQ growth in the last quarter of FY22 as well. It said that a healthy net new large deal flow is critical to sustain the premium valuation that the stock has commanded in recent days in expectation of a pick-up in revenue growth after delivering below-industry growth for each of the last 10 years. “We expect margins to expand modestly as wage hikes are over and operating leverage will play a role,” the firm said.
Kotak Institutional Equities: The research firm expects sequential revenue growth of 4.4% in c/c, which is above the guidance range of 2-4%. Revenue growth will be powered by continued strength in discretionary spends, and success in mining of large accounts. It expects EBIT margin decline of 20 bps qoq on account of full quarter impact of wage revisions at the mid and junior levels that was effective September 1; lower employee utilization rate; and impact of attrition. The research firm expects investor focus on levers to defend margins noting potential increase in cost structure and wage pressure; attrition rate of 20.5% on ttm basis is high and will likely increase to 24-25%. It also added saying that measures to staff projects and handle supply-side challenges will be keenly followed; indications on IT spending for CY2022E and whether it syncs with the optimism demonstrated by industry analysts; success in getting price increases to offset cost pressures, and pipeline of mega-deals that seems to have dried up for the industry.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)
Financial Express is now on Telegram. 
