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    Wipro likely to post a margin below its comfort zone — here are other key numbers to track

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    Wipro likely to post a margin below its comfort zone — here are other key numbers to track


    Wipro results: India's fourth largest software services exporter — Wipro — is expected to report a quarterly margin below its comfort zone of 17-17.5 percent.

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    Wipro — India's fourth largest software exporter by market capitalisation — is all set to report its quarterly financial results on Wednesday. Analysts in a CNBC-TV18 poll expect the IT major's margin — or the key measure of a company's profitability before taking into account the impact of interest and taxes — for the April-June period to fall by 60 basis points sequentially.
    If that happens, Wipro's margin will slip below its comfort zone of 17-17.5 percent. And the road ahead looks gloomy given the company has pushed its wage hikes starting June 1.
    Wipro will be reporting its corporate earnings at a time when India's IT space is reeling under elevated employee costs on account of high attrition, even as revenue growth is robust thanks to higher demand for technology across sectors.
    Analysts estimate Wipro's revenue growth at 2.6 percent to Rs 21,395 crore for the three-month period compared with the previous quarter.
    In dollar terms, they expect Wipro's revenue to grow 1.3 percent on quarter to $2,758 million.
    Revenue in constant currency terms — or revenue without taking into account currency fluctuations — is expected to grow 2.5-2.8 percent sequentially. This will be within the company's revenue growth guidance of 1.3 percent.
    Wipro's existing revenue guidance — at the end of the January-March period — did not include the company's acquisition of US-based Rizing, which closed on May 20.
    For the July-September period, Morgan Stanley expects Wipro's revenue guidance for the July-September period to be at 2.5-4.5 percent.
    CLSA has pegged the revenue guidance at 2-4 percent.
    Analysts in the CNBC-TV18 poll peg the company's EBIT margin to come in at 16.4 percent — a cut of 60 basis points compared with 17 percent in the January-March period.
    Margin pressure in the IT firm is likely to be fuelled by costs related to visa and hiring, and increased amortisation due to the Rizing acquisition.
    In its financial results for the quarter ended March 2022, Wipro had guided for a sub-17 percent increase in its margin for the next 2-3 quarters before returning to the 17-17.5 percent band.
    Analysts peg Wipro's organic revenue growth — or growth in the company's revenue internally — at two percent without the impact of Rizing.
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