July 17, 2019

Wipro Q1FY20 Modest Revenue Growth

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Edelweiss Securities
Motilal Oswal Financial Services
Centrum Wealth Management
Kotak Securities

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Wipro a leading software company is scheduled to make public its April 2019 – June 2019 quarter results (Q1FY20) today (17th July) and tech market analyst expect a fair revenue growth along with a drop in the earnings before taxes (EBIT) and interest margin. The multinational corporation had reported a net profit of more than Rs 2,099 crore during this quarter Q1FY19, with a gross income of Rs 13,980 crore. It had given an income growth guidance of +/- 1 % for the April 2019 – June 2019 quarter to the company.

Have a look at what leading brokerages are expecting from the company on July 17 results:

Edelweiss Securities

The IT firm is expecting no constant currency growth as 22 basis points of currency mean a revenue drop. The Edelweiss Securities has adjusted earnings before interest and tax, decline, as the overall growth of the company is projected to dip by 90 basis points. The decline in the revenue is due to wage hikes which could be slightly offset by top pricing and operational efficiencies.

Motilal Oswal Financial Services

The financial firm is expecting a huge profit after tax at Rs 2500 crore, which is 33% from Rs 2,099 crore during the same quarter the previous year. On a chronological basis, though, Motilal Oswal Financial Services expects growth in revenue by 1.5% percent during the April 2019 – June 2019 quarter that is a good ratio as compared to the January-March 2019 quarter.

Centrum Wealth Management

The Centrum Wealth Management would watch for constancy in execution. After the achievement of exchange, the IT software company Wipro would still have a net cash of Rs 17,500 crore on their finance balance sheet that is around 10% of Market-cap. For now, the EPS estimates for FY20E/FY21E are Rs17/18.8 per share, respectively. The stock market is trading at a ratio of 14x FY21E EPS.

“We expect Wipro to guide Q2FY20 revenue growth in the range of 1.5-3.5 percent QoQ in CC terms. Wipro will need to deliver a strong Q2 if they are to achieve their expectation of growing revenues faster in FY20 compared to 5.4% growth in CC terms reported in FY19,” they said in an earnings preview note.

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Kotak Securities

The Kotak Securities are expecting a constant-currency income growth of 0.4 % and cross-currency growth of 65 bps. The overall revenue growth of the company is expected to be lower on a reported basis due to the divestment of business. The Revenue growth expectation of Kotak Securities within Wipro’s guidance is +/- 1 % for the April 2019 – June 2019 quarter.

The earnings before interest and taxes margin is likely to drop down due to salary amendments that are effective from June 1, 2019. The net profit of the company appears modest on a year over year comparison, despite strong earnings before interest and tax growth due to the high base of the June 2018 quarter in which the company reserved a gain of 2.5 billion from the sale of hosted data center business.

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