Wipro Q1 Results Preview: IT company’s profit may decline, revenue likely to grow marginally – what brokerages say on guidance

Information technology major Wipro Limited may report mixed earnings in the first quarter of the financial year 2022-23 (Q1FY23). The IT services company’s profit may decline on both a year-on-year and sequential basis, while revenue in both dollar and rupee terms may show marginal growth. 

According to several brokerage estimates, Wipro’s profit may slip around 6-4 per cent quarter-on-quarter, while 8-9 per cent year-on-year during the June-end quarter of FY23. Similarly, revenue in dollar terms could come at around 1-1.5 per cent QoQ, according to brokerages. 

While even in Rupee terms, the revenue on QoQ basis may grow around 3-4 per cent during Q1FY23, the brokerages report in their preview notes on Wipro. 

Equirus Securities expects IT services US$ sales to grow at 2.9 per cent in CC (constant currency) terms including Rizing (expect organic growth at +1.9% in CC terms) qoq against growth guidance of 1-3 per cent qoq in CC terms excluding Rizing.  

Similarly, recurring IT services EBIT margins may decline by 40 basis points qoq with headwinds from M&A-related margin pressure and rise in amortisation cost, higher supply side issues, higher travel cost to be partly compensated by tailwinds from operating leverage and productivity gains, it said. 

The brokerage expects Wipro to guide for 2.5-4.5% qoq growth in IT services' US$ sales in CC terms for 2QFY23E including expected inorganic growth contribution of around 1.5% qoq in 2QFY23E. 

Motilal Oswal said that the growth in Q1FY23 should remain within the management’s guidance band provided in Q4FY22. It expects demand commentary to remain strong and sees margin will be impacted by wage hikes and continued investments in Q1FY23. 

Q1FY2023 is expected to be a steady quarter in terms of sequential revenue growth for IT services firms amid an adverse macroeconomic environment, ShareKhan said. It added, Resurgence of USD against global currencies will dent USD revenue growth rate.  

EBIT margin of most IT service companies to decline sequentially, owing to higher retention costs, wage revision, visa costs, and rising travel expenses. Rupee depreciation is expected to offset headwinds partially, ShareKhan noted. 

Shares of Wipro Limited on Tuesday ended in green, advancing 0.19% to Rs 405.50 apiece on NSE