Wipro gives solid guidance, despite pressure on margins

Wipro Q1 number

Corporate Action
by 5paisa Research Team Last Updated: 2022-08-08T18:42:24+05:30

The big news was that revenue guidance for sequential growth in revenues was upped to 5-7%. We will come back to the guidance part later. First, the quarterly numbers! Net profits for the Jun-21 quarter were up 8.7% sequentially at Rs.3,232 crore with operating profits up 1.6% at Rs.3,472 crore. The one area of concern was operating margins lower by 170 basis points at 18.8%, nearly 600 bps lower than Infosys and TCS.

Check: TCS Share Q1 Results

The big story was on the revenues front. For the Jun-21 quarter, Wipro reported sales revenue growth of 12.2% on sequential basis at $2.42 billion. The revenue growth was largely led by the acquisition of Capco and Ampion, which added 8% to revenue growth. The erstwhile Wipro business grew at 4%; still better than the average sequential growth in last few quarters. The bigger story is on revenue guidance, which has been upgraded by 200 basis points to the 5-7% range. Full year revenue guidance was robust at above 11%.

Read: Mindtree Q1 Results

It was a mixed quarter for Wipro. On the risk perspective, operating margins contracted by 170 bps to 18.8%, nearly 600 basis points below Infy and TCS. Also, attrition was up sharply at over 13% for Wipro. But the good news was much more potent. The revenue guidance is indicative of the efficacy of the premium-client focused strategy adopted by the new CEO, Thierry Delaporte. That appears to be paying off, which is evident in the price. In the last one year, Wipro stock is up 145%, which also coincides with the tenure of the CEO. The focus on premium clients, digital rethink and the strong guidance; mean that Wipro may be poised for a new higher trajectory on stock performance!

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