Will Wipro results beat analysts’ estimates? Check preview ahead of Q2 FY21 earnings

Citi expects dollar revenue growth of 2.8% (QoQ) to $1976 mn in Q2 FY21 vs $1922 mn in Q1 FY21 and decline 3.6% (YoY) of $2049 mn in Q2 FY20. Revenue in rupee terms will improve 1.3% (QoQ) to Rs 15,115 cr from Rs 14,923 cr and will remain flat at Rs 15,130 cr (YoY). Wipro’s EBIT margin will recover 90 bps to 19% from 18.1% (QoQ) and 128 bps from 17.7% (YoY). Profit is expected to improve 7.9% (QoQ) to Rs 2578.5 cr from Rs 2390 cr and 1% from Rs 2552 cr (YoY). Investors should focus on the new CEO’s strategy, Q3 21 guidance (management expects 0-2% revenue growth qoq), comments on BFSI, energy & healthcare verticals, margin trajectory and buyback details.) Citi expects 1.3% QoQ revenue growth in CC terms (150 bps cross currency benefit) which includes contribution from acquisition of IVIA Serviços and 4C. I.T. Services margins likely to be flattish QoQ.

Macquarie expects dollar revenue growth of 4% (QoQ) to $1988 mn in Q2 FY21 vs $1922 mn in Q1 FY21 and decline 2.5% (YoY) of $2049 mn in Q2 FY20. In CC (Constant Currency) terms, this would translate to 2.5% QoQ and -3.7% YoY. Revenue in rupee terms will improve 2% (QoQ) to Rs 15,214 cr from Rs 14,913 cr vs 0.6% (YoY) at Rs 15,125 cr. Wipro’s EBIT margin will see fall 10 bps sequentially to 18% from 18.1% (QoQ) and will improve 40 bps from 17.6% (YoY). Profit is expected to improve 2.2% (QoQ) to Rs 2442 cr from Rs 2390 cr and to worsen 4.3% from Rs 2552 cr (YoY).

BofA expects dollar revenue to grow 4.3% (QoQ) to $2005 mn in Q2 FY21 and to degrow 2.2% (YoY).  Revenue in rupee terms will reduce by 4.6% (QoQ) to Rs 14,595 cr and improve 1.7% (YoY). In CC terms, this would translate to 1.8% improvement. EBIT margin will sequentially reduce by 38 bps to 18.6% and will improve by 52 bps (YoY). Profit is expected to improve 1% (QoQ) to Rs 2404 cr and degrow by 6% (YoY).

Kotak Sec expects $ 1988 mn Revenue which is 3.5% higher than last quarter (QoQ) and 2.9% lower than last year (YoY). Margins are expected to come in at 19.2% which is 21 bps more than last quarter (QoQ) and 116 bps more than last year (YoY). The profit is expected to be around Rs 2602 cr which is 8.9% higher than last quarter (QoQ) and 2% higher than last year (YoY). Nomura expects sequential CC Revenue growth of 2% and cross-currency tailwind of 145 bps. They think Growth will be led by addressing supply side constraints in cloud and infrastructure services. Wipro has announced plenty of large deals in the last three months some of which have ramped up in the quarter and will lead to robust performance.

CLSA expects $ 1971 mn Revenue which is 2.6% higher than last quarter (QoQ) and 3.8% lower than last year (YoY). Margins are expected to come in at 19.4% which is 33 bps more than last quarter (QoQ) and 131 bps more than last year (YoY).  The profit is expected to be around Rs 2460 cr which is 2.9% higher than last quarter (QoQ) and 3.6% lower than last year (YoY). Also, CLSA sees negative 0.7% QoQ CC organic revenue growth and 0.3% growth from integration of 4C and IVIA acquisitions.

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Nomura expects $ 2016 mn Revenue which is 3.4% higher than last quarter (QoQ) and 3% lower than last year (YoY). Margins are expected to come in at 18.9% which is 20 bps more than last quarter (QoQ) and 120 bps more than last year (YoY). The profit is expected to be around Rs 2513 cr which is 5.6% higher than last quarter (QoQ) and 1.4% lower than last year (YoY).

(Authored by Rahul Kamdar)