Views on Wipro 1QFY2016 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on Wipro 1QFY2016 Results:

Wipro announced 1QFY2016 results today. The company posted a 1.1% qoq in USD IT Services revenues to end the period at US$1,794.1mn V/s US$1,775mn in 4QFY2015 and US$1,770mn expected. The guidance for the 1QFY2016 was US$1,765-1,793mn, a (0.5)-1% qoq growth. Thus results have come, at the upper end of the guidance. In rupee terms, the revenues came in at INR 12,238cr V/s INR 12,207cr expected and INR 12,142cr in 4QFY2015.

On Constant Currency (CC), the company posted a 0.2% qoq growth in 1QFY2016. On CC basis, the key verticals, which posted a qoq dip was Healthcare, Life Sciences & Services, Global Media & Telecom and Energy, Natural Resources & Utilities, which dipped 3.9%, 1.8% and 3.0% respectively. The domains which posted growth was Retail, Consumer Goods & Transportation, Manufacturing & Hitech and Finance Solutions, was 4.5%, 2.1% and 1.3% qoq respectively.

In terms of geography, USA posted a 2.6% qoq CC growth , while India & Middle East business and APAC and Other Emerging Markets, posted a 1.7% qoq and 0.4% qoq CC growth respectively. The geography, which posted the dip on CC basis, is 5.3% qoq.

On the EBDITA margin front, the EBDITA came in and EBIT at 18.5% V/s 20.0% at 21.3% V/s 23.0% expected. Thus the EBDITA and EBIT have posted a 169bps and 144bps qoq dip respectively. The IT services, EBIT margins came in at 21.0%. The margin dip was mainly on back of currency impact and higher wage hikes. On operating front the utilization level was 71.3% v/s 70.5%, with attrition levels at 16.4% V/s 15.6%.Consequently; the PAT came in at INR 2,188cr V/s INR 2,261cr expected and INR 2,272cr in 4QFY2015 a dip of 3.7% qoq.

In terms of client additions, the company added 36 clients during the quarter and for 2QFY2016, the company expects revenues from our IT Services business to be in the range of US$1,821mn-US$1,857mn, implying a 1.5-3.5% growth qoq, with expectations that the worst is over in the Energy, Natural Resources & Utilities domain and Healthcare, Life Sciences & Services expected to bounce back in 2QFY2016. We maintain our BUY rating on the stock with a target price of INR 753.

Shares of WIPRO LTD. was last trading in BSE at Rs.588.4 as compared to the previous close of Rs. 585.35. The total number of shares traded during the day was 204435 in over 6624 trades.

The stock hit an intraday high of Rs. 594 and intraday low of 575. The net turnover during the day was Rs. 119847126.

Source : Equity Bulls

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