Moneycontrol Bureau
With results for Infosys and TCS out of the way, all eyes will be on the country’s third-largest IT services exporter Wipro when it reports quarterly earnings Friday.
A CNBC-TV18 poll of analysts forecasts the firm’s dollar revenues to grow 0.76 percent to USD 1785 million while revenue in rupee terms may rise 1.35 percent to Rs 11,070 crore. Operating profits are seen at Rs 2,431 crore while EBIT margin is seen unchanged at 22 percent.
Analysts will also likely watch out for guidance the company gives for the fourth quarter, likely to come in at 1-3 percent or 2-4 percent – crucial because weakness in Wipro’s strongest vertical, energy (17 percent of revenues) may bog down revenue growth.
Given its track record in the past, the company is known to deliver realistic guidance and performance in the fourth quarter will determine whether the company meets the 8-10 percent year-on-year growth analysts are forecasting for the full year. The overall industry is expected to grow 13-15 percent this fiscal.
Analysts will also watch out for two key things: whether pressure from top clients is off (it fell 3.7 percent for the top client in the second quarter and 2 percent for the top-five) and whether there is any comeback in discretionary spending in Europe.
The today number of active clients will also be in focus after they decreased from 1,022 in the first quarter to 1.018 in the second, despite strong additions.
Wipro shares have under-performed peers and the broader market, rising a mere 2 percent over the past one year, compared to 14 percent, 25 percent and 27 percent, respectively, for TCS, Infosys and Wipro.
Following its tepid growth rates over the past few years, the stock trades at relatively inexpensive valuations of 14 times FY15e expected earnings, compared to about 25 for TCS.
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