“We attribute the decline to broader weakness in financial services and high exposure to consulting services. Yoy growth rate will slow down to a trickle. The revenue decline will have a corresponding impact on margins. We forecast 20 bps QoQ decline even as margins will likely increase on YoY comparison,” Kotak Institutional Equities said.
Analysts are expecting Wipro to give Q2 revenue growth guidance of decline of 1% at the lower end of the band and growth of 1% at the upper end of the band.
“The revenue decline is likely to be led by broader weakness in financial services, hi-tech verticals, and softness in its consulting business. It would be interesting to see if the weakness has spread to other verticals as well,” said Dhruv Mudaraddi, Research Analyst, Stoxbox.
Things to watch out for in Wipro results
1) Revenue growth outlook and margin guidance for Q2 of FY24.
2) Demand trends in key verticals like BFSI, consumer, manufacturing, healthcare, and E&U.
3) Outlook for consulting business (Capco and Rizing), which has been impacted due to pullback in discretionary spending.
4) Attrition and hiring plan.
5) Deal intake/pipeline, leaky bucket update, and any change in the deal pipeline’s composition in terms of cost takeouts vs. discretionary/transformational projects.
6) Any delay, deferment or cancellation of projects due to macro uncertainties.
Wipro result history
An analysis of the last 12 quarterly results of Wipro shows that on 7 occasions, the stock has given positive returns on post-earnings days. Wipro’s best post-earnings day was in July 2020 when the stock ended with a gain of nearly 17% amid Covid-related tailwinds.
The worst performance during the period was in October 2022 when the stock eroded 7% of investor wealth.
Also Read: Wipro CEO Thierry Delaporte has my full support, board’s backing: Rishad Premji
Wipro Trading Strategy
Flat on a year-to-date basis in 2023, Wipro has been among the underperformers in Nifty. Trading near its 200-EMA, Wipro has been making range-bound movement.
“Divergence is witnessed on a weekly time frame between price, RSI, and OBV; Price has made a new low and RSI and OBV have not been able to make a new low indicating a weak sell-off in Wipro. OBV Increasing and Price trading in a range is an indication of accumulation,” said Kunal N Kamble of Bonanza Portfolio.
Based on the technical structure, he recommends accumulating Wipro around Rs 390 or a fall in the price to Rs 340 levels, which can be used as a buying opportunity for an upside target of Rs 600.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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