Mixed quarter with good delivery but muted guidance

17 Jan 2024
5 Min read 
  • Wipro reported mixed results for 3QFY24, with good delivery but muted guidance.
  •  Positive commentary on the Consulting vertical is encouraging.
  •  Wipro's IT Services revenue declined 1.7% QoQ in CC, but was near the upper end of guidance.
  •  The company provided muted guidance for 4Q, with revenue performance expected to be in the range of -1.5% to +0.5% QoQ.
  •  Despite revenue decline, Wipro maintained its IT Services EBIT margin at 16.1%.
  •  The management commentary suggests that the drag from the Consulting segment is bottoming out, which should improve overall growth.
  •  However, weak 4QFY24 revenue growth guidance and unchanged commentary on demand and discretionary spending are concerns.
  •  Wipro's FY24 revenue growth rate is expected to be one of the lowest among Tier-1 IT Services peers.
  •  The company's TP is INR520 based on 19x FY26E EPS, and the current valuation is viewed as fair.
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