Wipro Ltd (Q2 FY14)

India Infoline News Service | Mumbai |

Q2 FY14 quarter for Wipro IT services saw a convincing revenue performance with constant currency revenue growth (+3.2% qoq) coming towards the higher end of the guidance (2%-3.8%qoq).

CMP Rs514, Target Rs576, Upside 12.1%
 
  • IT services revenue marginally ahead of estimates; IT products grow 4% yoy

  • Relatively broader growth across business segments; Client mining continues to be robust 

  • OPM performance beats estimate supported by weak rupee and operational improvements; Attrition spikes up 

  • Q3 FY14 guidance indicates improving traction; Management commentary remains largely positive; Maintain BUY

Result table*
(Rs mn)
Q2FY14
Q1FY14
%qoq
Q2 FY13
% yoy
Net sales
109,920
97,346
12.9
106,566
3.1
Operating profit
25,038
20,203
23.9
21,382
17.1
OPM (%)
22.8
20.8
202 bps
20.1
271 bps
Depreciation
(2,616)
(2,501)
4.6
(2,795)
(6.4)
Interest
(656)
(495)
-
(537)
-
Other income
3,412
3,361
1.5
3,234
5.5
PBT
25,178
20,568
22.4
21,284
18.3
Tax
(5,754)
(4,251)
35.4
(5,079)
13.3
Effective tax rate (%)
22.9
20.7
-
23.9
-
Other Prov./Minority
(103)
(84)
-
(64)
-
Adjusted PAT
19,321
16,233
19.0
16,141
19.7
Adj. PAT margin (%)
17.6
16.7
90 bps
15.1
243 bps
Reported PAT
19,321
16,233
19.0
16,141
19.7
EPS (Rs)
7.9
6.6
19.0
6.6
19.7
Source: Company, India Infoline Research
*Only Wipro IT business (IT services and products)

IT services revenue marginally ahead of estimates; IT products grow 4% yoy

Q2 FY14 quarter for Wipro IT services saw a convincing revenue performance with constant currency revenue growth (+3.2% qoq) coming towards the higher end of the guidance (2%-3.8%qoq). The reported dollar revenues of US$1.63bn (+2.7% qoq) were just marginally below our estimate of US$1.64bn. For the quarter, the cross currency impact of ~50bps was below expectation (1%). The IT products business growth of 4% yoy was also slightly ahead of estimates (we expected a flat yoy growth). Management indicated improving traction in key focus accounts, deal pipeline and win rates. Discretionary spending in the US also continued its strong traction.


Relatively broader growth across business segments; Client mining continues to be robust  

Growth in Q2 FY14 was relatively broader based across business segments as compared to previous quarter/s. Among verticals, growth was led by Healthcare (+5.8% qoq) and telecom/media (+5% qoq). Within services, product engineering – a discretionary service along with business application service were key drivers, registering growth of 4.1% qoq and 4.7% qoq respectively. Across geographies, growth was driven by NA (+2.9% qoq), Europe (+2.3% qoq) and APAC (+6.8% qoq). 


Client mining continued to be strong with Top/Top2-5/Top6-10 clients growing above company average (5.5%/3.7%/3.9% qoq respectively). Non top 10 clients too showed decent traction growing 2.3% sequentially. Management also allud

BSE 286.00 [1.20] ([0.42]%)
NSE 287.20 [0.60] ([0.21]%)

***Note: This is a NSE Chart

 

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