Wipro Q1 net profit seen down 5% QoQ to Rs 1,640cr

Moneycontrol Bureau

April-June has been a strong quarter for software services exporters, with both Infosys and Tata Consultancy Services beating street expectations. Now all eyes will be on India's third largest IT company Wipro, which reports its third quarter earnings on Friday.

Given the strong performance by TCS and Infosys, expectations from Wipro will be high. However, it is expected to continue to lag peers this quarter too.

Analysts on average expect the Bangalore-based company to report a April-June quarter net profit of Rs 1,640 crore, down 5 percent quarter-on-quarter, while Rupee revenue is seen up 3 percent to Rs 9,917 crore, according to a CNBC-TV18 poll.

Wipro's fast moving consumer goods business as well as the lighting business has now been demerged, so the results are related to IT services and products business only.

The company is likely to report EBIT (earnings before interest, taxes) of Rs 1,843 crore, up from Rs 1,713 crore in Jan-March and EBIT margin is seen expanding to 18.58 percent from 17.82 percent.

As far as Wipro's IT business goes, its US Dollar revenue is seen up 0.2 percent to USD 1.59 billion, while Rupee revenue is seen up 5 percent quarter-on-quarter to Rs 8,942 crore.

Wipro had guided for its first quarter US Dollar revenue to be in the range of -0.6 percent to 1.6 percent.

KEY THINGS TO WATCH

- Guidance for the second quarter
- Overall outlook on demand and discretionary spends by clients
- Margins in the quarter
- Deal wins in the first quarter
- Cross Currency impact

The company has lagged peers in the past several quarters and any low growth guidance again will raise questions whether the company can catch up with peers with a sustainable healthy growth, analysts say.

STOCK WATCH

Wipro shares closed at Rs 376.25, down 4.1 percent on Thursday. Since March-end, the stock is down 14 percent, underperforming the wider CNX-IT index, which has gained over 6 percent and the CNX Nifty, which is up 4 percent.