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Apr 18, 2013, 06.33 PM IST | Source: Moneycontrol.com

Here's what to expect from Wipro Q4 earnings

India's third largest software services exporter Wipro will report Jan-Mar earnings on Friday, in what has so far been a mixed quarter. HCL Technologies beat street expectations, Tata Consultancy Services was largely in-line witn estimates and Infosys shocked the street with a disappointing guidance for FY2014.

Moneycontrol Bureau

India's third largest software services exporter Wipro will report Jan-Mar earnings on Friday, in what has so far been a mixed quarter. HCL Technologies beat street expectations, Tata Consultancy Services was largely in-line with estimates and Infosys shocked the street with a disappointing guidance for FY2014.

Wipro had guided for a fourth quarter sequential revenue growth of 0.5-3 percent in IT services, implying US Dollar revenue of 1,585-1,625 million.

However, due to depreciation in British Pound, there could be a 30 bps negative impact on US Dollar revenue, feels Ashish Chopra of Motilal Oswal. Overall, in Rupee terms, he is expecting Wipro's revenue to grow 2.2 percent sequentially.

Axis Capital too expects Wipro's revenue will increase 2.2 percent, while EBIT (earnings before interest, taxes) will grow near 4 percent and net profit growth will be up 0.1 percent.

"Wider range in Q4 revenue guidance for IT services reflects volatility in external environment. Business momentum remains steady in energy and utilities, healthcare, banking, retail and consumer services. However, clients in investment banking and telecom original equipment manufacturers continue to lag," said Axis Cap's Priya Rohira and Vishal Desai.

Morgan Stanley expects Wipro’s consolidated EBIT margins to rise 31 bps sequentially but IT services margins are seen down 22 bps.

KEY THINGS TO WATCH

Wipro only gives quarterly guidance, unlike the full year guidance issued by Infosys. TCS said on Wednesday that FY14 was looking to be a better year than FY13 and it is confident of beating NASSCOM's full year industry growth guidance of 12-14 percent.

Infosys, on the other hand, had guided for a much lower 6-10 percent growth.

Now the street will be keenly watching any outlook related comments from Wipro's management.

Morgan Stanley expects the company to guide for a 2-4 percent quarter-on-quarter growth in first quarter revenue from IT services.

The street will be also eyeing its hiring plans and wage hikes if any this year, margins in Q4 and expectations in Apr-June, pricing trends, deal pipeline as well as growth in its consumer care and lighting business.

Wipro has demerged consumer care & lighting and other non IT businesses into a separate private company called Wipro Enterprises.

STOCK WATCH

Wipro shares closed at Rs 369.05 on NSE on Thursday, down 1.5 percent. The stock has declined 6.5 percent since end of Dec, compared with over 3 percent uptick in the wider CNX IT index.

While Motilal Oswal recommends investors "buy" Wipro shares, Axis Capital has a "hold" rating.

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