furloughs in payment provider segment led to revenue declines (-2.9% YoY/-2.1% CC). CBU (-3.7% YoY/-2.5% CC) and Technology (-2.2% YoY/1.4% CC) underperformed as well....

In Q1FY21, Gross revenue rose 1.3% YoY, primarily helped by favorable Forex changes. On Constant Currency (CC) basis, IT services revenue declined 4.4% YoY on subdued business activities across verticals such...

We upgrade Wipro to Buy from Sell as they are managing costs well, delivering solid cash flows, new CEO, potential buyback & inexpensive valuations. Wipro has surprised us consistently with margin defense. We have raised our earnings estimates by 12%/9% for FY22E/23E led my margin upgrade & now...

an early single digit QoQ fall in revenue is largely due to fall in revenue of business verticals. up by 6% to Rs 615.20 crore. The PBT was up by 4%qoq to Rs 3095.30 crore after accounting for lower interest cost and higher depreciation. With taxation stand higher by 10%qoq to Rs 683.80 crore, the PAT was down by 3%qoq to Rs 2411.50 crore. The minority interest was...

Thierry Delaporte, the new CEO of Wipro (joined on 6 July 2020), in his first analyst call hinted at a strategy of profitable growth'. He hoped to finalise a plan to drive improvements across all spheres in the quest to achieve industry-leading growth. He also said that Wipro would make bold bets and set stretch goals and will aim to drive a high-performance culture. A detailed strategy will likely be unveiled in the coming months. While Thierry, like all new CEOs, is likely to paint a bright future through his strategy roadmap, we will only know whether he is on the right track in 6-8 quarters. In the meantime, Wipro has continued its multi-quarter run of positive EBIT margin surprises. 1QFY21 IT services EBIT margin performance overshadowed everything else. While revenue was broadly in...

Wipros ability to control costs and collections justifies the improvement in EBIT margin/cash conversion, despite the sharp drop in revenue. While full impact of the COVID-19 pandemic on pricing and Working Capital (WC) cycle is yet to play out, Wipros outlook on managing margin stability (v/s Jun20) and healthy cash conversions are impressive. Additionally, other factors in favor are playing out, such as (a) upside of a turnaround under a new CEO/strategy, and (b) We upgrade our FY21/FY22E EPS by 6%-12%, largely led by margin surprise. As the company enters 2QFY21, deal activity is expected in Consumer, Technology and Communications while it remains cautious in In BFSI, there is good demand around RTB and cost optimization spends. As the company enters 2QFY21, deal activity is expected in Consumer, Technology and Communications while it remains cautious in other verticals. Thought visibility has improved slightly (v/s Mar20), management has refrained Near-term focus is on tightly controlling incremental spends.

While concerns about the travel & transport vertical (<5% revenue share for tier-I India IT) are at the forefront, we believe retail the second largest vertical with 14% share will be the worst hit for India IT services.

The company has not provided for 1QFY21E guidance, citing uncertainty. We cut our EPS estimates by 0.9/1.5% for FY21/22E. Our TP of Rs 185 is based on 11x FY22 EPS. We maintain REDUCE rating on Wipro based on lower than expected revenue and margin performance. Covid-19 related global slowdown will lead to cut in discretionary spending, pricing discounts and postponement of large deals wins. Headwinds in BFSI (Medium term), stress in Manufacturing (Auto) and ENU (Energy) will offset the improving outlook in Healthcare and Communication.

As expected, WPRO has not given revenue growth guidance for Q1FY21 given the uncertainties as regards the impact of Covid-19 pandemic. It plans to take strong cost control measures to deal with the same. On the positive side, WPRO confirmed that the...

Guidance dropped; Pricing and margin pressure seem high Wipro's 4QFY20 IT services revenue was in line on a constant currency (CC) basis though EBIT margin came in ~100bps lower. Covid-19 adversely impacted revenue for 4Q by 70-80bps. Margins seem impacted by pricing discounts and extra costs to become work from home (WFH) ready. Wipro, among the few companies that gives a revenue guidance (a quarterly one unlike annual ones given by Infosys and HCL Technologies), has decided to drop it for the very first time since it started the practice. This is on the back of a fluid situation on demand and difficulty in quantifying impact of the disruption. Much of what it said would not have come as a shock to the market as...

Wipro (WPRO) reported a subpar Q4FY20 with a miss on both revenue and operating margins.

Covid-19 led disruption to continue to impact business In the near term, the company has indicated that its clients could curtail discretionary spend (to conserve cash in the near term) and restructure existing projects. Further, Wipro expects pricing pressure to impact near term revenues. There is uncertainty in terms of pricing, demand, which has led the company to refrain from giving guidance. Key sectors expected to be impacted are retail, travel, hospitality and manufacturing (especially auto and its supply chain). Further, we believe there may be secondary impact on...

Nifty IT index has corrected 16% since last one-month factoring in potential demand shock from COVID-19 spreading to key client markets (US/ Western Europe) along with oil price shock and potential impact on global growth. The COVID-19 crisis in our view will have more severe impact on global economy than GFC as its severity is increasing on day-to-day basis. As Indian IT growth expectation is anchored to global economy, COVID-19 could derail it...

The spread of Covid-19 has led to lockdowns in many countries globally and could have adverse economic implications. In addition, the recent fall in crude prices could also have an adverse impact of fiscal health of oil producing countries. As a result, IT companies, which have considerable exposure to verticals such as oil, energy & utilities; banking & capital markets; manufacturing and travel & transport could see an adverse impact from the ongoing crisis. Companies like Wipro, Infosys in large cap and MindTree, NIIT Tech, Sonata software, Cyient, Accelya Solutions among...

Same Story Goes on: Wipro came up with yet another weak quarter with muted Q4FY20.

Wipro Ltd is a leading India based provider of IT Services, including Business Process Outsourcing (BPO) services, globally. Further, Wipro has other businesses such as IT Products, Consumer Care and Lighting...

Operating profit declined 5.0% YoY, as operating margin contacted 143bps YoY to 17.6%. However, on QoQ basis, operating profit grew 1.9% QoQ, led by margin expansion for IT Services (+0.3% QoQ) on...

Wipro's growth continues to lag within the Tier-1 IT, but its relative growth underperformance has reduced with growth moderation of larger peers. We reckon that growth will continue to lag peers ahead based on soft outlook on ~50% of rev comprising BFSI, Communications and Technology (Hi-Tech sub-segment). This is expected to be offset by relatively better outlook in Consumer (e-commerce), Healthcare (HPS revival) and Manufacturing (healthy deal pipeline). The soft guidance for 4Q indicates that reaching industry level growth is an uphill task. While growth concerns remain (BFSI/large accounts-led), there is limited scope for margin expansion (higher localisation). We expect USD revenue growth of 2.2/5.9/6.0% and IT services EBIT% at 18.4/18.2/18.3% for FY20/21/22E. The stock is up ~6% in 3M and valuations are at ~14.0x FY21E (vs. 15.2x Tier-1 IT median). Risk to our thesis includes improved US/Europe macro and INR depreciation. We maintain NEU on Wipro post in-line revenue, better margin performance and lower than expected guidance. Continued headwinds in BFSI and large accounts offset the improving outlook in Consumer and Manufacturing verticals. Our TP of Rs 235 (unchanged) is based on 12x Dec-21E EPS.

We largely maintain our FY20/21E revenue/EPS forecast. We forecast IT services revenue (in US$) and EPS CAGR of 4% and 6.8% respectively over FY19-21E. We maintain ACCUMULATE recommendation and TP of Rs269 based on PER of 15x FY21E. Key Highlights and Investment Rationale Q3FY20 IT services revenue growth of 1.8% QoQ in CC This was in-line with our forecast of 1.5% QoQ growth and at mid-point of WPRO's guidance of 0.8%-2.8% QoQ growth. Revenue growth in US$ terms was 2.2% QoQ. Digital solutions (39.8% of revenue) grew by 22.8% YoY....