IGI Logo

Wipro Dec’22 Quarter Results – IT services margin beats estimates; Q4 Guidance below expectations

Actual vs. expectations

Revenue tad below estimates while margins beat estimates

Likely stock reaction

Neutral

Key positives – Margin beat, steady order book; attrition moderated to 21.2%.

Result Summary

 Wipro reported revenues of USD2.8bn, up 0.2%/6.2% QoQ/YoY (CC 0.6%/10.4% QoQ/YoY), tad below our expectations of USD2.81bn/1% CC QoQ. (TCS Q3FY23 revenues was US$ 7.07bn, 2.2% CC QoQ; Infosys revenues was US$4.66bn, 2.4% CC QoQ; HCL revenues was US$3.24bn, 5% CC QoQ)

IT services EBITM expanded by ~120bps sequentially to 16.3%, ~80 bps above our estimates, on the back of strong operational improvements and automation-led efficiencies which negated impact of salary increases and promotions. (TCS IT services EBITM grew ~50bps QoQ to 24.5%; Infosys EBITM was flat QoQ at 21.5%; HCL EBITM grew ~160bps QoQ to 19.6%).

 Adj. Profits at Rs30.53bn (14.8% QoQ, 2.8% YoY), vs our estimates of Rs30.4bn.

Guidance: IT services revenue is expected to grow in the range of -0.6% to 1% QoQ CC in Q4FY23 (below our expectations of 1-3%). Company expects FY23 revenue growth to be in the range of 11.5-12% YoY in CC term.

The company has signed 11 large deals with TCV of over US$1bn in Q3. Overall order booking were over US$4.3bn in Q3, 26% YoY.

Growth by Verticals (all in CC terms)

Financial Services: 9.6%YoY ( V/s 14.4% YoY in Sep’22 quarter)

Manufacturing: 14.4%YoY ( V/s 16.7% YoY in Sep’22 quarter)

Healthcare: 8.9%YoY( V/s 8.1% YoY in Sep’22 quarter)

 Communications: 6.4%YoY (V/s 12.4% YoY in Sep’22 quarter)

Energy: 10.1% YoY (V/s 4.9% YoY in Sep’22 quarter)

Consumer Business Unit: 16.8% YoY (V/s 22.2% YoY in Sep’22 quarter)

Technology: 4% YoY (V/s 6.2% YoY in Sep’22 quarter)

 
Growth by Strategic market units (all in CC terms)

 Americas 1: 11% YoY ( V/s 15.3% YoY in Sep’22 quarter)

Americas 2: 9.4% YoY ( V/s 12.3% YoY in Sep’22 quarter)

Europe: 12% YoY ( V/s 11.9% YoY in Sep’22 quarter)

 APMEA: 7% YoY ( V/s 11.3% YoY in Sep’22 quarter)

Manpower details

Total Headcount: 258,744, down 435 QoQ

LTM Attrition: 21.2%, V/s 23% in Sep’22 quarter and 23.3% in Jun’22 quarter