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Result Synopsis

Wipro(WPRO) reported broadly inline financial performance for the quarter. Both, the revenue growth and EBIT margin were inline with expectation. The sequential growth was 0.7% QoQ in USD terms, led by Energy, Natural Resources & Utilities vertical (up 8.6% QoQ). Revenue declined by 0.6% QoQ in cc terms. There was sequential improvement in EBIT margin(up 17bps QoQ) led by falling attrition and improving pyramid. The moderation in employee attrition continues as LTM attrition was down 200 bps QoQ to 19.2%.

However, the clients remain cautious regarding the evolving macroeconomic situation especially in the US and Europe; and consequently, we expect moderation in growth in near term. We estimate revenue CAGR of 9.4% over FY23?25E with average EBIT margin of 15.2% over the period. We maintain our NEUTRAL rating on the stock with revised target price of Rs 413/share at 16.0x on FY25E EPS. The stock trades at PER of 16.8x/14.9x on FY24E/FY25E EPS.

Result Highlights

* Wipro reported revenue of Rs 231.9bn, (down 0.2% QoQ in INR terms, up 0.7% QoQ in USD terms for IT services). Revenue declined by 0.6% QoQ in cc terms. The growth was led by Energy, Natural Resources & Utilities vertical (up 8.6%
QoQ).
* EBIT margin improved by 17 bps QoQ to 15.8%, led by decrease in cost of revenues (down 0.3% QoQ). EBIT margin was also supported by falling attrition  and improving pyramid.
* Order bookings remained strong as it grew by 29.0% YoY to $4.1bn and large deal bookings grew by 155% YoY.
* Net employee addition was (1,823) employees for the quarter to a close of 256,921 employees. LTM attrition decreased by 200 bps QoQ to 19.2%. Net utilization (excluding trainees) was up 200 bps QoQ to 81.7%.
* Total number of active clients decreased by 43 clients QoQ to 1441 active clients. Offshore revenue mix grew by 10 bps QoQ to 59.1%
* Has guided -3.0% to -1.0% QoQ revenue growth in cc terms for Q1FY24.
* Announced RS 12,000 crore of shares buyback at a price of Rs 445/- per share.

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