CMP: Rs673 |
Target Price: Rs680
■ Wipro's IT services revenue grew 6.9% QoQ (8.1% CC; 4.6% organic) to USD2.6bn in Q2FY22, a tad ahead of our estimates. IT services EBITM declined 10bps QoQ to 17.7% as revenue momentum and operating efficiencies largely negated wage hikes and investments in sales, capabilities and talent.
■ Wipro guided for IT services revenue to be in the range of USD2,631-2,683mn in Q3, implying 2-4% QoQ growth. Management remains fairly confident of delivering double-digit organic revenue growth in FY22. It reiterated EBITM guidance of 17-17.5% for FY22.
■ Wipro signed 9 large deals with a combined TCV of USD580mn in Q2. Management indicated that 18% growth in deal TCV wins in H1 (ACV - 29%) and robust deal pipeline across markets with a good mix of small and large deals give good revenue visibility.
■ We raise FY22E/FY23E/FY24E EPS by 1.8%/3.4%/4.3%, factoring in Q2 performance and sustained growth momentum. We retain Hold with a revised TP of Rs680 at 25x Sep'23E EPS (earlier 23x).