Key things to watch out for in Wipro Q4 earnings

Moneycontrol Bureau

After India's top software services exporter Tata Consultancy Services reported strong results on Monday, it’s the turn of its rival Wipro to report fourth quarters numbers on Wednesday. Investors will keenly eye the results of the Bangalore-based IT company, especially, since it has undergone a restructuring over the last few quarters. Analysts will also watch out for any commentary on the outlook for the company and the sector. So far Infosys has shocked the street with significantly lower-than-expected 8-10% US dollar revenue guidance for fiscal 2013, while TCS expects it will be a normal year and it is confident of beating the NASSCOM guidance of 11-14% growth in FY13. Analysts on average expect Wipro's revenue from IT services to rise 1-3% sequentially and 20-23% year-on-year in January-March. Wipro chief Azim Premji discontinued the co-CEO model in 2011, following which TK Kurien took over the reins as CEO. Ashish Chopra of Motilal Oswal Securities said there are early signs of improving growth and margins at Wipro, making a strong case for rerating. "Wipro is likely to benefit from improving revenue growth and margins over the next two years post the tear-down of the twin CEO structure and strong focus by the senior leadership team. We are already seeing early signs of improvement, and with valuations at the lower quartile among the top-4, Wipro is poised for a re-rating," he said. Analysts say Wipro's volumes will grow 2-3% in the fourth quarter, while utilization level is likely to increase around 100 basis points to 75-76%, helped by higher number of freshers. It is likely to guide for a 2-4% quarter-on-quarter growth in the first quarter. Infosys has guided for 0-1% growth in April-June. Here's what you should watch out for in its earnings announcement on Wednesday: - Guidance for the first quarter and any commentary on demand outlook for FY13. - Pricing trends and deal pipeline. - Hiring outlook for the fiscal. "(We) expect positive management commentary on the demand environment and restructuring efforts," said Sandip Agarwal and Kunal Sangoi of Edelweiss Securities. Wipro shares closed up 4.2% at Rs 442 on NSE on Tuesday. Since December-end, the stock up near 11%. The wider Nifty has gained near 13% in the same period.