Wipro - Inline 1QFY13; Weak guidance - IIFL

In a challenging environment, Wipro's inline 1QFY13 results are a relief. Revenue increased 0.3% qoq in cc (vs -0.4% qoq at Infosys and 4% at TCS). The positives continue as hiring was strong and the growth was driven by strong account mining.

- EBITDA margins were slightly lower than our estimates. This was primarily on account of higher S&M expenses. During 1QFY13, its S&M expenses were higher than even Infosys.

- However, the lackluster 2QFY13 guidance overshadows the positives during Wipro's 1QFY13 results. At 0.3% to 2.3% qoq growth, the guidance is lower than our expectations of a ~3% qoq guidance.

- Wipro's valuations have corrected significantly in the recent past. While its 1QFY13 results highlight the weakness in the environment and the emerging disconnect in growth rates among larger vendors, they also highlight that Wipro is fast adapting to the new demand environment. On lower revenue cqgr and EBITDA margins, we are downgrading our FY13-15 eps estimates by 5-7%. Maintain BUY.

Source : Equity Bulls

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