Wipro Q4 may see a margin squeeze; all eyes on share buyback

Edelweiss expects the software major to post 1 per cent QoQ revenue growth in CC terms.

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Brokerages are widely expecting the IT major to guide to 0.5-2.5 per cent revenue growth for the June 2019 quarter.
NEW DELHI: India's third-largest IT player Wipro is likely to report on Tuesday a 1-1.9 per cent quarter-on-quarter (QoQ) growth in constant currency (CC) revenues on the back of digital tailwinds.

In rupee terms, top line growth may grow, much in line with a zero-2 per cent forecast the firm made for the fourth quarter. Margin is seen falling by 10-30 bps QoQ.

Commentary on financial services vertical, sustainability of margin, state of demand from the healthcare segment, capital allocation, quantum of a likely buyback and performance of the acquired entities will be keenly watched.


Edelweiss expects the software major to post 1 per cent QoQ revenue growth in CC terms. Dollar terms are seen rising 1.2 per cent on quarter because of currency momentum to the tune of 60 basis points.

"The adjusted Ebitda margin is expected to inch 10 bps lower owing to rupee appreciation. Growth rates in energy and utilities, acceleration in BFSI, participation in large deals and digital growth rates are the key variables," the brokerage said in a report.

Kotak Institutional Equities sees the constant currency revenue growth rate of 1.5 per cent.

"We expect EBIT margin decline of 30 bps on a sequential basis, courtesy rupee appreciation, alignment of entry-level compensation and headwinds from insolvency of a telecom client," Kotak said.
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Reliance Securities believes that the financial services segment for FY20E, revenue growth guidance for the first quarter and IT budget commentary are key monitorables. This brokerage is pencilling in dollar revenue growth of 2 per cent and CC growth of 1.9 per cent QoQ.

Centrum Broking, which eyes revenue growth in CC terms at 1.6 per cent, said,"Wipro has shown improved performance in select verticals (BFSI and consumer). Top clients have also been showing steady performance. Consistency in performance would be keenly watched for sustainable re-rating.

Brokerages are widely expecting the IT major to guide to 0.5-2.5 per cent revenue growth for the June 2019 quarter.
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