Shares of Wipro plunged nearly 6% to ₹652 apiece on the BSE in Thursday’s early trading session after IT services major posted a consolidated net profit of ₹2,969 crore for the December 2021 quarter, almost flat compared to the year-ago period, but said demand environment continues to be ‘robust’.
The IT service provider’s revenue from operations during the quarter under review rose 29.6% to ₹20,313 crore as compared to ₹15,670 crore in the same quarter last year. Its revenue from IT services witnessed an increase of 2.3% quarter-on-quarter (QoQ) and 27.5% year-on-year (YoY).
“Both revenue and EBIT (earnings before interest and taxes) margin slightly below expectation. The revenue growth was led by strong performance in BFSI and consumer verticals. EBIT margin was down on a sequential basismainly led by higher employee cost (cost of revenue) that grew sequentially. Deal booking remained strong,” said Piyush Pandey, Lead Analyst – Institutional Equities, Yes Securities. It currently has an Add rating on the IT stock.
Wipro expects revenue from IT services business to be in the range of $2,692-$2,745 million in the fourth quarter of the current fiscal, which translates to a sequential growth of 2% to 4%. The company’s board has also declared an interim dividend of ₹1 per equity share.
“Wipro’s Q3FY22 results were a mixed bag with revenues missing estimates but margins surprising positively due to lower amortization. Growth outlook remains strong and margins will likely be steady at 17% levels. Over FY22-24, we expect Wipro to deliver 10%/8% revenue and EPS CAGRs,” said said Jefferies in a note.
The brokerage has maintained its Underperform rating on Wipro shares with revised target price of ₹620 on weak earnings growth and rich valuations.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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