Views on Wipro 3QFY2016 Result: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on Wipro- 3QFY2016 Results:

Wipro (CMP: INR543/ TP: Under Review: Buy / Upside):

"During 3QFY2016, the company posted numbers lower than expected on all fronts. The IT services posted a 0.3% sequential growth in USD revenues to US$ 1,838mn V/s US$ 1,841mn expected. On the constant currency terms (CC), the IT services posted a 1.4% QoQ growth. The revenues came in at the middle end of the band of US$ 1,821-1,858mn at the actual currency realized. In rupee terms, overall consolidated revenues are expected to come in at INR 12,861cr V/s INR 12,739cr expected a growth of 2.8% QoQ.

In terms, of geography, the USA posted a 0.3% QoQ CC growth, Europe posted a 1.4% QoQ CC growth, India & Middle East Business posted a 5.4% QoQ CC growth and APAC and Other Emerging Markets posted a 3.1% QoQ CC growth. In terms of the vertical, Global Media & Telecom posted a 2.7% QoQ CC growth, Finance Solutions posted a -0.7% QoQ CC, Manufacturing & Hitech posted a -0.6% QoQ CC growth , Healthcare Life Sciences & Services posted a 6.0% QoQ CC, Retail, Consumer Goods & Transportation posted a QoQ CC 4.6% and Energy, Natural Resources & Utilities posted no growth during the period.

On the operating front, the EBITDA margins came in at 20.6% V/s 21.5% a downtick of 121bp QoQ. Consequently, PAT came in at INR 2,243cr V/s INR 2,318cr expected a growth of 0.4% QoQ. Other operating matrix, the gross utilization levels dropped to 66.4% V/s 69.5% in 2QFY2016. Net utilization (excl support) dropped to 73.8% V/s 77.2% in 2QFY2016. In terms of client addition, it added one client of US$50mn+ and major ones in the small order sizes. Overall 39 clients were added during the quarter.

For 4QFY2016, the company has guided for revenues of IT services in the range of US$ 1,875-1,912mn, a QoQ growth of 2.0-4.0%. We maintain our BUY rating on the stock with the price target under review."

Shares of WIPRO LTD. was last trading in BSE at Rs.542 as compared to the previous close of Rs. 541.75. The total number of shares traded during the day was 125329 in over 3784 trades.

The stock hit an intraday high of Rs. 545.15 and intraday low of 534.05. The net turnover during the day was Rs. 67948972.

Source : Equity Bulls

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