IT services company Wipro is likely to register up to 2.3 per cent sequential de-growth in revenues in constant currency terms (CC) in the April-June quarter of fiscal year 2023-24 (Q1FY24) due to weak macros, cut in discretionary spends, and project delays, observed analysts.
The company is scheduled to announce the June quarter results on Thursday, July 13.
According to brokerages, revenue volatility is likely to keep Ebit (earnings before interest and tax) margins range-bound in Q1FY24, pegged between 15.5-16.1 per cent. Profit-after-tax (PAT), meanwhile, is expected to decline up to 2 per cent quarter-on-quarter (QoQ) to Rs 3,075 crore in the recently concluded quarter.
At the bourses, so far this calendar year 2023 (CY23), shares of Wipro were flat, as against 7.8 per cent rise in the S&P BSE Sensex.
Key monitorables: Management's commentary on deal ramp-up, Q2FY24 guidance, large deal-win commentary, demand outlook across verticals, hiring activity for FY24, and any revisions in growth outlook for FY24.
Here's what brokerages expect from Wipro's Q1FY24 numbers:
HSBC Global Research
The brokerage firm expects Wipro to report 1.1 per cent sequential decline in revenues to Rs 22,941 crore in Q1FY24, with 2.3 per cent drop in CC terms. Revenue volatility, therefore, would keep margins rangebound, they said. Net profit, on the other hand, is expected to fall 5 per cent QoQ to Rs 2,921 crore in the June quarter from Rs 30,745 in Q4FY23.
Analysts predict the IT services company's revenues to slip 2.3 per cent QoQ in CC terms, within its guided range of -3 per cent to -1 per cent QoQ. The revenue impact, they said, would be due to weakness in BFSI, hi-tech verticals, and consulting business. The revenue decline would further impact Ebit margins by 10 bps QoQ to 16.2 per cent in the June quarter.
The brokerage firm forecasts 0.5 per cent QoQ de-growth in revenues to Rs 23,180 crore due to weaker ramp-up. Wage hikes, partially offset by reduced subcon cost is likely to contract Ebit margins by 238 bps QoQ to 13.8 per cent in Q1FY24 from 16.1 per cent in Q4FY23. Profit-after-tax, meanwhile, was seen at Rs 3,015 crore, down 2 per cent QoQ.
Analysts foresee 1.7 per cent sequential decline in CC revenue growth, with a likely 20 bps cross-currency tailwind. This muted growth is due to exposure to hi-tech and consumer vertical as well as slowdown in discretionary spends, they said. That said, the brokerage firm shared a 'hold' on the counter, with a target price of Rs 420 per share.