Analysts Cut Target Prices On Margin Woes

Analysts cut Wipro Ltd.’s earnings forecast and expect its margin to narrow in the ongoing fiscal on account of persisting supply-side challenges such as attrition, higher-than-usual salary hikes and an increase in travel and other discretionary costs.

The IT company saw its revenue increase 2.7% sequentially in the three months to March, meeting estimates. Its revenue from IT services jumped 3.1%. But the company’s margin contracted 130 basis points.

Wipro Q4 FY22 Highlights (QoQ)

• Net profit rose 3.98% to Rs 3,087.3 crore, compared with the Rs 3,005-crore estimate.

• EBIT fell 4.82% to Rs 3,402.9 crore.

• 12-month trailing attrition rate rose to 23.8% from 22.7% at the end of the third quarter.

Wipro expects 1-3% sequential revenue growth, translating into 16-18% year-on-year basis in constant currency. “We expect to grow in double digit for FY23 as well. We have grown over 3% continuously in the last six quarters,” said Thierry Delaporte, managing director and chief executive officer.

Margin, he said, are expected to grow at 17-17.5% in the medium term. “For the next two-three quarters, however, we will see slightly lower margin because of the investments we have made.”