IT player Wipro will on July 15 release its June quarter scorecard, which is likely to come out softer on a quarter-on-quarter (QoQ) basis but year-on-year (YoY), the numbers are likely to show decent growth.
Other than the numbers, the second-quarter outlook, demand trends in key verticals and deal pipeline will be in the focus.
Brokerage firm Emkay Global expects a 19 percent YoY growth in net sales and a 16.6 percent YoY rise in PAT. However, QoQ net sales may see a rise of 9.3 percent whereas PAT may see a decline of 6.3 percent.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) may rise 27 percent, while the EBITDA margin may rise 142 bps YoY but QoQ, EBITDA may be flat while the margin may see a decline of 206 bps, Emkay estimates.
"We expect a 9.3 percent QoQ USD revenue growth (organic growth about 3.3 percent led by Metro deal ramp-up) with about 20 bps cross-currency tailwinds," Emkay said.
"We expect IT Services EBIT margins to decline by 220 bps sequentially to 18.5 percent, factoring in the integration of low-margin Capco and senior leadership team hires," said Emkay.
The estimates of Kotak Institutional Equities show an 18.5 percent YoY and 9.1 percent QoQ rise in Wipro's June-quarter net sales.
Adjusted PAT, as per Kotak, may jump 19.2 percent YoY but contract 4.1 percent QoQ. EBITDA growth may be 21.2 percent YoY but may be flat QoQ. EBITDA margin may rise 52 bps YoY but fall 212 bps QoQ.
Kotak expects sequential revenue growth of 9.4 percent in constant currency (CC), close to the upper end of the 8-10 percent guidance range.
"Revenues include $129 mn contributions from CAPCO acquisition or 6 percent contribution. Excluding CAPCO, we expect Wipro to deliver CC QoQ revenue growth of 3.4 percent. Revenue growth will be powered by the ramp-up of the Metro deal and the mega-deal with a US cosmetics company. We expect the Metro deal to contribute 1.7 percent to quarterly revenues," Kotak said.
It expects large deal wins to be a focus area, especially after the completion of recruitment of the new chief growth officer.
"We expect investor focus on – (1) timeline by which it intends to catch up with peers on revenue growth, (2) large deal pipeline and pace of decision-making, (3) future M&A bets, especially after CAPCO acquisition,
(4) growth from top 10 accounts, an important indicator on turnaround progress and (5) supply-side pressures in light of 'delayed' wage revisions," said Kotak.
Estimates of Motilal Oswal Financial Services show a 17.4 percent YoY and 7.7 percent QoQ growth in net sales
PAT may rise 8.4 percent YoY but decline 12.8 percent QoQ, said Motilal Oswal. The brokerage firm expects a marginal impact from supply-side issues.
"The company is expected to report an additional debt of $750 million for funding the CAPCO acquisition. Margin will be impacted by salary hikes to senior employees from June 1, 2021. Q2FY22 guidance and deal wins would be in focus after the new strategy and senior hires," the brokerage said.
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