Today's Wipro Q1 Results: Profit, Revenue, Growth Guidance, and Five Things to Watch Out For



Preview of Wipro Q1 results: Wipro Limited, a prominent player in information technology (IT), is anticipated to announce a year-over-year (YoY) profit decline in the single digits despite a double-digit increase in revenue. Due to seasonal challenges and a moderating in demand, the increase for the quarter is anticipated to be muted.


The revenue and margin outlook for FY23, the demand outlook despite macro headwinds, the outlook for engineering research and development, vertical growth guidance, large deal wins or pipeline, margin trajectory given supply-side pressures, and commentary on any potential future M&A activities are important factors that investors will closely monitor.

Profit After Tax/ Net Profit


According to a report by Kotak Securities, the Bengaluru-based company is anticipated to record a consolidated PAT of Rs 2,900-3,000 crore for the quarter, with consolidated revenue in the region of Rs 21,300-21,700 crore. On revenues of Rs 18,252 crore, the company recorded a PAT of Rs 3,232 crore during the same period last year.


Revenue Growth

According to Kotak Institutional Securities, Wipro is forecasting a 2.5%–4.5% increase in revenue for the September quarter. It stated that this comprises a 1.2% contribution from the Rising purchase and offers an organic growth estimate of 1.5% to 3.5%.


The IT industry leader had forecast a CC revenue growth of 1-3% QoQ, excluding rising contribution.


Margins


The margins of Indian IT businesses are still being squeezed by supply-side challenges, as has been seen in recent quarters, and Wipro will also continue to feel the pinch as labor and transportation expenses grow. But the effect on margins will likely be somewhat mitigated by a weaker Indian rupee.


The earnings before interest and tax (EBIT) margins will probably decrease by 200–250 basis points (bps) year over year and by 30–100 bps quarter over quarter.


Because of greater retention costs, wage revision, visa fees, and rising travel expenses, the EBIT margin of the majority of IT service organizations will decrease consecutively. According to ShareKhan, the weaker rupee is anticipated to largely offset negative factors.


Revenue Guidance


Brokers anticipate the business to announce a sales projection of 3-5 percent sequential CC growth, taking into account the first two months following the purchase of Rising.


According to the Kotak Institutional Equities analysis, "Estimate Wipro to guide for 2.5-4.5 percent growth in CC on a sequential basis, which includes 1.2 percent contribution from Rising acquisition, and we expect an organic growth guidance of 1.5-3.5 percent."


According to Motilal Oswal, the management's guideline band provided in Q4FY22 should be maintained for the growth in Q1FY23. It anticipates continued solid demand comments and believes that pay increases and ongoing investments will have an impact on margin in Q1FY23.

Constant currency revenue


Brokers anticipate that the company will increase constant currency (CC) revenue by 1% to 2.5%, in line with the guidance given during the previous quarter.


Cross-currency movements are still negative, and this might have an impact on reported dollar revenue and margins, according to Emkay Global.


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