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Wipro’s 3QFY24 performance suggests inflection. Revenues (-1.7% cc QoQ) came towards the upper end of the guided band, a first in past four quarters. Next quarter’s guide is incrementally better (-1.5% to + 0.5%) after three quarters of sequentially lower bands. CAPCO, its consulting business, saw double digit booking growth. That, we believe, is a first quantitative sign of rebound in discretionary spend. CAPCO’s exposure to discretionary budget plagued WPRO’s recent performance. Now as environment turns, that could lead its rebound. 5x consulting-to-downstream services revenue equation could drive growth convergence with peers, validating WPRO’s, and Thierry’s, initial strategy. Moreover, WPRO’s margin resilience means incremental revenues could percolate down, supporting earnings trajectory. Our FY24-26E EPS CAGR for WPRO is 16%, highest among top-4. PER, on the other hand, is the least. WPRO’s PER discount to INFO has widened to 26%, vs past-5 year average discount of 19%. 4Q guided growth band for both have converged, which should narrow the valuation gap, in our view. We raise our target multiple for WPRO to 20x (from 18x). Changes to our EPS are limited. But our FY25/FY26E EPS are 3%/8% above Street’s, implying upgrade potential. We retain BUY with a revised TP of INR 550 (from INR 500).

* 3QFY24 – beats expectations: IT Services revenues declined by 1.7% QoQ in cc terms, towards the upper end of (3.5%)-(1.5%) guided band. Americas 1 grew by 2% QoQ cc, led by Healthcare. Americas 2 was soft (-1%), due to North America’s BFSI weakness (- 4%). Europe declined by 4%, likely due to full quarter impact of large program completion last quarter. The company maintained margins at 16%, ahead of JMFe: 15.6%, despite weak top-line and wage hike, reflecting benefits from on-going efficiency programs. PAT at INR 26.9bn, was broadly in-line.

* Guidance and Outlook: WPRO guided for (1.5%)-0.5% cc QoQ growth. This is the first guidance in the past four quarters where upper-end implies growth, indicating some trend inversion. Though the market has not changed fundamentally over the past three months, there are green shoots, per the management. Double digit booking growth QoQ in CAPCO is an early sign of discretionary spend picking up. Even as discretionary bottoms out, WPRO’s order booking sustains. Deal wins were healthy at USD 3.9bn despite shorter quarter. LTM deal TCV of USD 15bn has come at a book-to-bill of 1.4x, highest among peers. WPRO’s work on delivery/operational excellence, pruning low margin businesses and structural cost reduction (pyramid/lower discretionary spend) has helped protect margins despite c.USD 180mn revenue erosion over 9MFY24. Now, as growth returns, margins could trend up. Absence of recent restructuring cost is a near-term lever

* Upgrade + re-rating potential: We have tweaked our FY24-26E estimates to build 3Q actuals. We are building 160bps expansion of IT Services EBIT margin over FY24-26E. That largely explains our 3%/8% higher EPS over consensus for FY25/26E. We thereofre see earning upgrade potential. Also, as WPRO’s growth inflects, its PER discount to INFO (26% vs. 5-year avg of 19%) could narrow. We raise our target multile to 20x (at historical average discount of 20% to INFO’s target multiple). Maintain BUY.

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