Views on Wipro Limited 4QFY2017 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking):

Wipro (CMP: INR 496 / TP: INR 583 / Upside: 17.5%)

"The company posted 4QFY2017 results better than expected. IT services revenues came in US$1,955mn V/s US$1,937mn expected V/s US$1,903mn in 3QFY2017, a 2.7% QoQ growth, with a 1.7% QoQ growth in constant Currency (CC). In rupee terms, revenues grew by 2.6% QoQ to INR 13,987cr V/s INR 13,561cr expected V/s INR 13,688cr in 3QFY2017.

In terms of geography, the CC growth was USA (1.2% QoQ), Europe (4.4% QoQ), India & Middle East (0.5% QoQ), while APAC & Other Emerging markets (-0.7% QoQ). In terms of verticals, the CC growth was Manufacturing and Technology (4.7% QoQ), Finance Solutions (3.2% QoQ), Consumer Business Unit (2.6% QoQ), Energy, Natural Resources & Utilities (1.9% QoQ). The verticals which dipped was Communications (-6.6% QoQ) and Healthcare, Life Sciences & Services (-2.0% QoQ).

On the operating front, EBIT margin came in at 17.8% V/s 16.0% expected V/s 16.4% in 3QFY2017, an expansion of 180ps QoQ. Thus, PAT came in at INR 2,267cr V/s INR 2003cr expected V/s INR 2,109cr in 3QFY2017, up 7.5% QoQ sequentially. In terms of client additions, the company added one client in the US$75mn+, 1 in the US$50mn+, one in the US$20mn+. On back of the Utilization, the company had gross utilization of 73.1% v/s 71.6% in 3QFY2017. The attrition during the quarter was 14.8% V/s 15.4% in 3QFY2017. Also company has announced a bonus of 1:1. For 1QFY2018, the company has guided for US$1,915-1,955mn, a QoQ growth of (2.0)-0% QoQ band, which indicates a dim outlook for the 1QFY2018. However, given the valuations, we maintain our BUY rating with a target price of INR 583."

Shares of WIPRO LTD. was last trading in BSE at Rs.490.6 as compared to the previous close of Rs. 494.55. The total number of shares traded during the day was 1206650 in over 20186 trades.

The stock hit an intraday high of Rs. 513 and intraday low of 489. The net turnover during the day was Rs. 601505768.

Source : Equity Bulls

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