Wipro Q2 Results Review - A Mixed Bag; Commentary Falls Short Of Broad Recovery: Dolat Capital

Dolat Capital Report

Wipro’s IT services reported flattish CC revenue growth of 0.6% QoQ (our estimate: +0.8%). While banking, financial services and insurance grew at a healthy 2.7% QoQ in CC, energy and utility and manufacturing segments dragged growth by -3.7%/-2% QoQ in CC terms. IT services operating profit margin stood at 16.8%, up 35bps QoQ (our estimate: 16.7%).

Total contract value wins/Large deal wins at $3.6 billion/$1.5 billion are healthy and Q2 execution is notable, but Q3 guidance of -2% to 0% CC growth and ambiguity in recovery for E&U and manufaturing segment lowers visibility.

We tweak our FY25E EPS estimate by +0.9%, while retaining FY26E EPS and expect EPS growth of 6.4% for FY27E. Despite few positives, we believe overall recovery needs to be convincingly demonstrated. Thus, we revise to ‘Reduce’ with target price of Rs. 540 at 21 times FY27E earnings.

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