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...

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...

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.

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.

PAT was down 3.2% YoY to Growth in key verticals like BFSI (+0.4% QoQ CC) and ENU (1.2% QoQ CC) was soft during the quarter. However, verticals like Consumer (+7% QoQ CC), Health (+3.4% QoQ CC) and Manufacturing (+4.4% QoQ, CC) delivered strong growth on the back of the good performance in some sub-segments. In consumer BU, some sub-segments like e-commerce have driven growth during this quarter. This was led by [i] challenges in the semiconductor sub-vertical due to the US-China trade war and [2] higher furloughs in some of the top accounts Growth in key verticals like BFSI (+0.4% QoQ CC) and ENU (1.2% QoQ CC) was soft during the quarter. However, verticals like Consumer (+7% QoQ, CC), Health (+3.4% QoQ, CC) and Manufacturing (+4.4% QoQ, CC) reported strong growth on the back of the good performance in some sub-segments.

Wipro reported an in line quarter on all fronts. In constant currency, global IT services revenues grew 1.8% sequentially (ITI acquisition contribution 0.3%) while EBIT margins expanded 30 bps QoQ to 18.4%. Key highlights of the quarter were: 1) Digital (39.8% of revenue) grew at 2.8% QoQ, 22.7% YoY, 2) decline in voluntary attrition to 15.7% (vs. 17.0% in Q2) and 3) Addition of one client QoQ in US$100 million+ bucket. Besides the...

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....

Broad-based growth elusive. Automation continues to deliver Wipro IT Services QoQ growth of 1.8% in 3QFY20 (3.3% YoY) in constant currency (CC) was 30bps above our estimate of 1.5%- standing at the middle of its guided range (0.8% to 2.8% QoQ growth), of which 30bps was contributed by ITI acquisition. QoQ growth was driven by verticals like Consumer (7%), Healthcare (3.4%) and Manufacturing (4.4%). Revenue guidance for 4QFY20 was pegged at 0%-2% in CC terms, tad lower than expected. EBIT margin of 18.4% (in IT Services) increased by 30bps QoQ against headwinds of more localized workforce (reaching >70% in US) with likely higher bench costs, lower utilization (250bps on...

Wipro (WPRO) reported an in-line operating performance in Q3FY20 with 1.8% QoQ CC revenue growth and 18.4% IT services EBIT margins.

Wipro Ltd.s consolidated operating margin and profit beat estimates in a quarter where the company absorbed the impact of wage hikes and its core IT services business witnessed subdued growth. Consolidated sales of Wipro for the quarter ended Sep 2019 registered a growth of 2% from Rs 14786 crore in the sequential previous quarter ended June 2019. OPM expanded by marginal 60...

Revenue for Q2FY20 witnessed slow growth both YoY and sequentially (4.0% YoY/2.8% QoQ) in contrast to last quarter's topline performance. Though being the strongest performer historically, BFSIs revenue this quarter was below expectations with a muted revenue growth of 3.6% YoY. The management highlighted that it was mainly due to macroeconomic conditions and lower spending by banking and capital market clients and completion of large digital projects. Energy and Utilities segment grew by 3.6% YoY (6.3% CC) while Health Business Unit had a positive revenue growth of 3.36% YoY (0.58% QoQ), which was in contrast to last quarter's performance....