Wipro, India's third-largest IT services exporter, will be in focus next week for its March 2017 (Q4) quarter results, after TCS and Infosys. The Azim Premji-controlled company will be declaring its financial performance on April 25.
It had given a revenue guidance of $1,922-1,941 million for the fourth quarter (Q4) after reporting $1,902.8 million for the December 2016 (Q3) quarter.
Analysts have a mixed view on whether the company will meet the guidance or report lower revenues.
Nirmal Bang Institutional Equities (NBIE) has projected $1,934 million, translating into a sequential growth of 1.63 percent. On a constant currency basis, the growth is expected to be slightly higher. "We see CC revenue growth of 2% QoQ in global IT services revenues. This includes revenues coming from its acquisition of Appirio which will be 200bps for two extra months," the brokerage said in its preview.
IDBI Capital Markets & Securities has a bullish forecast, pegging Q4 IT revenues at $2,036 million. "We expect full quarter consolidation of Appririo to add ~$30mn of incremental revenue. We expect EBIT margin to remain steady with impact of full quarter consolidation of Appirio and INR appreciation to be offset by operational efficiencies," the brokerage said.
For the third quarter ended December 2016, Wipro had reported 5.7 percent fall in December quarter (Q3) net profit to Rs 2,109.6 crore while total income in Q3 came at Rs 13,764 crore in comparison to Rs 12,952 crore for the year-ago period.
On Wednesday, Wipro shares were trading at Rs 494 on the BSE at around 12.25 pm, almost unchanged from the previous day's close.
For 2016-17, industry body Nasscom had estimated revenue growth for the ~$150 billion Indian IT industry to come in the range of 8.6 percent, lower from the earlier 8-10 percent projection in November 2016 and 10-12 percent in February last year.
Nasscom deferred its growth forecast for the next fiscal (FY2018) at its February summit to May, citing global uncertainty and US President Donald Trump's policies to defer projections for FY 2018.
Things to watch out for when Wipro declares its results, according to Nirmal Bang Institutional Equities:
In our interaction with the management during the quarter, Wipro highlighted that the Energy vertical - from which Wipro derives close to 4%-5% revenues - has reached its bottom and it is now be seen whether the vertical witnesses any revival considering recent volatility in crude oil prices.
The levers for margin expansion going into FY18. (4) How is the demand shaping up in its BFSI vertical post finalisation of client budgets in March 2017 and when does the company expect its European BFSI clients to start IT spending.
Any further price discounts given to retain strategic accounts during the quarter.
The level of acceptance of its automation platform 'Holmes' now when it is in the production stage and how much it can be used to improve margins in FY18.
Whether restructuring in India and Middle East businesses will get completed on time. Outcome of its six-themed strategy to improve organic growth through client mining and new client addition.
