IT company Wipro on Wednesday posted a 17 percent jump in consolidated net profit to Rs 2,930.6 crore for the quarter that ended on September 30, 2021. It also surpassed the $10 billion (around Rs 75,300 crore) annualised revenue run rate.
Suyog Kulkarni, Senior Research Analyst at Reliance Securities said Wipro numbers were definitely better than their expectations both in terms of revenues and margins. The dollar revenue growth outlook of 2-4 percent in Q3 is also better than their expectations at 1.5-2 percent.
He said, "Since the change in management and restructuring efforts, Wipro has been outperforming our expectations and growing at the rate of the industry. So comparing it with Infosys and TCS, the valuation discount is narrowing and from here on expect limited re-rating potential."
Going forward, the earnings per share (EPS) upgrade should drive the share performance. We have seen a good turnaround in Wipro and good revenue and deal win in the last few quarters, Kulkarni said.
On margins, he said, "For the last few quarters, the work from home tailwind, rising attrition, accelerated hiring and return of some of the SG&A costs will probably weigh on the margins. The benefits would be like operating leverage, which is there for both Infosys and Wipro. The second margin benefit for the companies would come as the digital portion of business is continuously rising for them."
Omkar Tanksale, senior research analyst at Axis Securities said Wipro has done a superior execution in terms of revenues and also showed strong resilience in terms of margins. Axis Securities was expecting EBIT margins at around 16.7 percent but Wirpo has reported around 17.7 percent, which shows strong resilience in terms of margins, Tanksale said.
"So not only good performance in terms of margins but also the revenue growth has been good. However, we believe that the IT services pack as a whole have strong visibility going ahead, because of deal wins for not only Wipro but also for the TCS and Infosys," he added.
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