Wipro - Mixed operating performance in the quarter - YES Securities

Our view and valuation

Overall, it reported mixed performance for the quarter. While, the revenue for the quarter was inline, the EBIT margin was below expectation. The demand environment continues to remain strong as order book in ACV terms grew 30% YoY in FY22. Attrition remains high but has started moderating. The new business strategy with focus on deeper connect with clients seems to be working fine. We expect it to maintain broadly stable margin in medium term led by improving employee pyramid and positive operating leverage. The Q1FY23 revenue growth guidance of 1-3% QoQ appears muted. We estimate revenue CAGR of 12.6% over FY22-FY24E, with average EBIT margin of 17.4%

The stock trades at PER of 18.8x on FY24E EPS. We maintain ADD Rating on the stock with revised target price of Rs 583/share, valuing it at 21.5x on FY24E EPS.

Result Highlights

- Reported revenue of Rs 208.6bn( up 2.7% QoQ in INR terms). IT services grew 3% QoQ in USD terms to $2.7bn

- EBIT margin was down 59 bps QoQ to 16.3%, on higher direct cost( up 3.9% QoQ). IT Services operating margin was down 60 bps QoQ to 17%

- Net Income for Q4FY22 was Rs 30.9 bn, an increase of 4.0% QoQ and 3.9% YoY

- Added 116 customers in the quarter compared to 67 in Q3FY22.

- Added 11,457 employee in the quarter to reach 243,128 employees. LTM attrition increased by 110 bps QoQ to 23.8%, However, the annualized quarterly attrition has started moderating

- Utilization (excluding trainees) was down 60 bps QoQ to 85.2%

- The interim dividend of Rs1 and Rs5 declared by the Board at its meetings held on January 14th and March 25th, 2022 would be considered as the final dividend for the financial year 2021-22

- Q1FY23 Guidance- Has guided for revenue between $2,748 mn - $2,803mn, which is a sequential growth of 1%-3% QoQ

Shares of Wipro Limited was last trading in BSE at Rs. 495.05 as compared to the previous close of Rs. 509.00. The total number of shares traded during the day was 1371314 in over 68844 trades.

The stock hit an intraday high of Rs. 519.00 and intraday low of 492.75. The net turnover during the day was Rs. 682713884.00.

Source : Equity Bulls

Keywords

Wipro INE075A01022 WIT Q4FY22 FY2022 ResultUpdate YESSecurities