Wipro Q4: Most analysts bet on muted numbers

Share price of Wipro emerged among the top losers on BSE during Monday a day ahead of its fourth quarter ended March 31, 2017 result. Wipro stocks closed at Rs 491.80 per piece on BSE, down 0.28%.

Investors were cautious on Wipro after Q4 result of its rivals' Infosys and TCS. 

Wipro has reported decline in consolidated net profit right from 6.72% drop in Q1, 8% tumble in Q2 to 6% fall in Q3FY17.

Q3FY17 saw consolidated net profit of Rs 2,110 crore, a drop of 5.6% as against Rs 2237.1 crore during the same period last year. However, gross revenues were Rs 13,690 crore, a rise of 6.4% on year-on-year basis.

Wipro has been lowering its revenue growth guidance from IT Services Business. Till Q3FY17, guidance was in the range of $ 1,922 million to $ 1,941 million. This has been brought down compared to guidance of $1,916 million to $1,955 million in Q2 and guidance of $ 1,931 million to $ 1,950 million in Q1.

Will Wipro be any different this Q4? 

Many analysts just like its peers hope for a muted Q4. 

Analysts at KR Choksey said, "We expect Wipro to record a USD revenue of $1944 million, up 2.2% qoq and mainly aided by consolidation of Appririo acquisition. Expect Wipro to report an EBIT margin of 16.3%, down 66 basis point on quarter-on-quarter (QoQ) led by consolidation of acquisition and INR appreciation against USD, EURO and GBP."

Analysts at Motilal Oswal said, "In the previous quarter, Wipro had guided 1-2% QoQ on cross currency growth for 4Q. However, this would include 7 weeks of additional revenue from the integration of Appirio (~1.5%). Excluding this, the guidance of organic growth is -0.5% to +0.5% QoQ CC. We expect organic growth to be flat in 4Q, Appirio is likely to add 1.5pp and cross-currency tailwinds to add 0.7pp, resulting in 2.2% USD revenue growth."

Jal Irani, Yusufi Kapadia  and Vivek Rajamani analysts at Edelweiss Financial Services said, "Wipro to post USD revenue growth of 1.5% QoQ and cross currency impact of 10bps (1.6% growth in cc). EBITDA margin estimated to expand 30 bps due to better realizations and higher utilisation. "
KR Choksey said, "Expect net profit margin to be at 14.9%, down 50 basis point qoq in Q4 FY17. Expect company to benefit from cross-currency tailwind of 23 bps. "

Motilal expects EBIT margin in IT services is expected to decline by 65 basis points. Also the integration of lower margin Appirio and INR depreciation during Q4 will add in to the drop of EBIT margin.

Motilal sees net profit to be at Rs  1,898.3 crore declining by 15.06% year-on-year (YoY) and 10% quarter-on-quarter (QoQ) basis. Revenue is seen at Rs 13,615.7 crore sequentially down by 0.12% yoy and 0.52% qoq. 

The trio at Edelweiss expects Wipro's net profit to be at Rs 2,165.7 crore up 2.7% yoy but down 3.1% qoq. Revenue is seen at Rs 13,897.9 crore growing by 1.5% yoy and 8.1% qoq. Earnings before interest tax depreciation and amortisation is seen at Rs 2,871.9 crore increasing by 3% yoy and 7.5% qoq. 

KR Choksey expects muted revenue at Rs 13,632.4 crore, while net profit down 9% yoy to Rs 2,235 crore.