Wipro is projected to post over 10 per cent year-on-year (YoY) drop in June quarter net profit on the back of lower utilisation and an expected drop in revenue. Brokerage firm Antique Stock Broking projected a 10.30 per cent shrinakge in bottomline and IDBI Capital Markets sees a 10.40 per cent fall.
Antique said Wipro is likely to report a 7.6 per cent QoQ and 6 per cent YoY decline in revenue in dollar term for the IT services business. The tech services and digital technology firm is slated to announce its June quarter numbers on Tuesday, July 14.
Market participants should focus on the commentary related to demand and deals wins, update on the further impact of Covid-19, timeline for new Chief Executive Officer and Managing Director Thierry Delaporte’s strategy for reviving the company and guidance for Q2FY21.
“We expect Wipro to wait for one more quarter for providing quarterly guidance,” IDBI Capital Market said. There are hopes that new deal wins would be challenging for IT companies until economies open up completely. Analysts believe revenue growth will stabilise from September onwards and the third and fourth quarter of FY21 will probably see some recovery.
Shares of Wipro underperformed other IT majors during June quarter, advancing 11.75 per cent to Rs 219.70 against a nearly 18.50 per cent rise in BSE Sensex.
With a 191 per cent gain during the April-June period, HCL Infosystems emerged the top gainer in the BSE IT index, followed by Subex (up 175 per cent), Kellton Tech (up 122 per cent) and Mastek (up 112 per cent). HCL Technologies, Infosys and TCS rose 14-28 per cent during the same period.
“Wipro has been lagging its large peers over the past few years with only low single-digit organic revenue growth in constant currency (CC) terms. However, the growth profile of Wipro should improve in the medium term,” Antique Stock Broking said.
Edelweiss Securities estimated 10.60 per cent YoY and 8.30 per cent QoQ drop in Q1 profit. “We expect revenue to fall 5.7 per cent in CC terms and estimate 20 basis points of cross-currency headwind to arrive at a 5.9 per cent QoQ decline in dollar revenue. We would be keenly watching at the new CEO’s strategic direction,” the brokerage said.