Friday, April 29, 2022

Wipro Mar’22 Quarter Results –Miss On Margins; Q4 Outlook Below Our Expectations

Actual vs. expectations

Revenues came in line while margin was below estimates

Likely stock reaction


Key positives – Broad-based revenue growth and steady progress on client mining 

Result Summary

·         Wipro reported revenues of USD 2.72bn, up 3.1%/26.4% QoQ/YoY (CC 3.1%/28.5% QoQ/YoY), tad below our expectations of USD2.75bn. (TCS Q4FY22 revenues was US$ 6.70bn, 3.2% CC QoQ; Infosys Q4FY22 revenues was US$4.28bn, 1.2% CC QoQ and HCLT Q4FY22 revenues was US$2.99bn, 1% CC QoQ) 

·         IT services EBITM declined 60bps sequentially during the quarter to 17%; 70 bps below our estimates.  (TCS IT services EBITM down 10 bps QoQ at 25%; Infosys EBITM declined 193bps QoQ to 21.6%; HCLT EBITM declined by 100bps to 18%)

·         Adj. Profits at Rs30.9bn (up 4% QoQ and YoY), vs our estimates of Rs30.6bn on account of lower taxes

·         Company guided Q1FY23 sequential growth to be in the range of 1% - 3% (below our expectations of 2-4%).

·          Company signed 9 large deals in Q4 with a TCV of USD0.4bn vs 0.6bn in Q3.

Growth by Verticals (all in constant currency terms)

·         Financial Services: 48.7%YoY ( V/s 47.4% YoY in Dec’21 quarter)

·         Manufacturing: 14%YoY ( V/s 4.9% YoY in Dec’21 quarter)

·         Healthcare: 12.8%YoY( V/s 9.1% YoY in Dec’21 quarter)

·         Communications: 24.4%YoY (V/s 26.5% YoY in Dec’21 quarter)

·         Energy: 13.5% YoY (V/s 15% YoY in Dec’21 quarter)

·         Consumer Business Unit: 34.6% YoY (V/s 37.9% YoY in Dec’21 quarter)

·         Technology: 14.5% YoY (V/s 21.9% YoY in Dec’21 quarter)

Growth by Strategic market units (all in constant currency terms)

·         Americas 1: 22.2% YoY ( V/s 22.7% YoY in Dec’21 quarter)

·         Americas 2: 33.8% YoY ( V/s 32.7% YoY in Dec’21 quarter)

·         Europe: 36% YoY ( V/s 38% YoY in Dec’21 quarter)

·         APMEA: 14% YoY ( V/s 12.5% YoY in Dec’21 quarter)

Manpower details

Total Headcount: 243,128, up 11,457 QoQ

LTM Attrition: 23.8%, V/s 22.7% in Dec’21 quarter and 20.5% in Sep’21 quarter.

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