Wipro Ltd - PINC Result Update

Wipro reported modest Q1FY11 revenue growth of 3.2%QoQ to USD1,204mn (IT services) beating the lower end of their revenue guidance. This is led by volume growth of 4.7%QoQ. Reported higher than expected EPS of Rs5.42 due to better profitability and lower tax rate.

• Strong volume growth in line with peers
• Broad based growth across major geographies and verticals
• Uptick in discretionary spend and a large deal pipeline

Outlook – Wipro has given a robust revenue guidance of 4.1%- 6.1%QoQ growth for Q2. The pricing environment is also stable. Q1 margin has been good but there might be incremental pressure on margin due to decline in utilisation and promotions. We remain positive on prospects of increase in discretionary spending, particularly in engineering, R&D which will benefit Wipro.

We maintain our 'BUY' recommendation onthe stock with a price target of Rs507.

Source : Equity Bulls

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