IndiaNivesh Securities has come out with its first quarter (April-June) earnings estimates for the technology sector. The brokerage house expects Wipro to report a 2.5 percent degrowth quarter-on-quarter (growth of 5.3 percent year-on-year) in net profit at Rs 2215.6 crore.
Net sales are expected to increase by 0.4 percent Q-o-Q (up 9.5 percent Y-o-Y) to Rs 12194.6 crore, according to IndiaNivesh Securities.
Earnings before interest and tax (EBIT) are likely to fall by 2.6 percent Q-o-Q (up 0.7 percent Y-o-Y) to Rs 2392.8 crore.
IndiaNivesh Securities' Report on Wipro:
We expect dollar‐revenue growth of 0.2 percent in Q1FY16 and constant currency growth of 0.5 percent in global IT services, which is in between the guidance range of ‐0.5 percent to +1 percent Q/Q (to USD 1,765‐1,793 mn). The first quarter tends to be weak from a revenue growth perspective, as fourth quarter tends to have a largish India component which does not get repeated in this quarter.
EBITDA margin to contract 60 bps Q/Q on account of one month impact of wage hike, visa cost and INR appreciation.
As a result, we expect net margin contraction of 54 bps Q/Q to 18.2 percent (v/s 18.9 percent in Q1FY15).
Key things to watch out for: (1) Q2FY16 dollar‐revenue growth guidance (street estimates 0.5 percent ‐2.5 percent Q/Q), (2) margin outlook, and (3) update on banking and energy verticals.
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