Kotak Institutional Equities also expects sequential constant currency revenue growth of 2 percent and cross-currency tailwind of 145 bps
Wipro, the fourth largest IT services company by market cap, is expected to report around 3.5 percent dollar revenue growth QoQ in the quarter ended September 30, 2020. Large deal wins and easing of supply-side constraints may boost topline.
The constant currency revenue growth could be around 2 percent QoQ, while profit is expected to grow in the range of 4-9 percent backed by revenue and stable EBIT margin.
"We expect constant revenue growth of 2 percent QoQ and cross-currency tailwind of around 150 bps. In USD terms, we expect revenue to grow by 3.5 percent QoQ. Growth is expected to be driven by large deal wins, easing of supply-side constraints, and recovery in consumer, technology, communication, and healthcare verticals," said Sharekhan which sees 9 percent growth in consolidated profit.
Kotak Institutional Equities also expects sequential constant currency revenue growth of 2 percent and cross-currency tailwind of 145 bps. Wipro has announced many large deals in the past three months, some of which have ramped up in the quarter and will lead to robust performance, it feels.
The brokerage expects stable EBIT margin on a sequential basis and an increase in the margin on year-on-year basis. "Margins even have scope for expansion noting lack of headwinds and tailwinds from growth and elimination of supply-side constraints on revenues."
Given the large deal wins, brokerages largely feel Wipro may give a guidance for Q3FY21.
Key things to watch out for would be new CEO Thierry Delaporte's strategy; buyback details; commentary on consumer business unit, energy natural resources, and utilities in lieu of lower crude prices; margin trajectory and pricing pressure; and deal win momentum.
"Wipro's payout policy is close to 50 percent of net profit expected largely through buyback of shares. Wipro completed its last buyback in mid-September 2019. Regulations require a cooling off period of 12-months before the next buyback announcement. Investors will look forward to the buyback announcement," Kotak said.
Earnings preview is only for the IT services business.The stock on Friday ahead of its quarterly earnings hit a record closing high of Rs 374.10 on the BSE, up 4 percent. It shot up 130 percent from its March lows.