Wipro - Quarterly estimates - ICICISecurities

- Expect consolidated revenue from IT services to rise 0.5% QoQ to USD1,593mn vs. the constant-currency guidance of USD1,575-1,610mn (-0.6 to 1.6% QoQ growth). Sequential cross currency impact will be ~0.8%. As a result, the revised guidance stands at -1.4% to 0.8% QoQ growth.

- EBIT margin for IT services will likely dip 30bps QoQ to 19.9% due to one month impact of wage hikes (6-8% offshore and 2-3% onsite) effective Jun'13 and higher visa costs partially offset by rupee depreciation (~3% QoQ), continued productivity improvements and slightly higher forex gains QoQ. Consolidated EBIT margin is expected to improve 30bps QoQ due to 100bps QoQ lower contribution of the low margin IT Products business, higher expected translation gain QoQ (which gets adjusted in overall revenues while consolidating) and other reconciliation items.

- Expect overall recurring PAT to dip marginally QoQ.

- We expect Wipro to guide for Q2FY14 US$ revenue growth in the range of 1-3% as order conversions have not picked meaningfully in Q1FY14.

- Key factors to watch: i) Q2FY14 guidance, ii) outlook on discretionary revenue, iii) outlook on spends in telecom OEM and technology segments and iv) new deal wins, as Wipro's engagement in RFPs has gone up in the recent past.

Source : Equity Bulls

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