Wipro dips 5% on weak revenue guidance for Q1FY19

Wipro
Shares of Wipro have dipped 5% to Rs 274 per share on the BSE in early morning trade after the India's third-largest information technology (IT) services company has gave a disappointing revenue growth guidance of -2.3% to 0.1% in CC (constant- currency) terms for the April-June quarter of 2018-19 (Q1FY19).

The company posted 6.69% quarter on quarter (QoQ) drop in its net profit at Rs 18 billion for the fourth quarter of 2017-18 (Q4FY18). Gross revenues were almost flat at Rs 137.7 billion, with a growth of 0.7% over the previous quarter.

Analysts on an average expected profit of Rs 21 billion and revenues of Rs 139 billion for the quarter.

“Actual growth may even be lower depending on the timing of divestiture of its hosted data centre services (DCS) business to ‘Ensono’ during Q1FY19 for US$405mn,”analysts at Emkay Global Financial Services said in results update.

“We reduce earnings estimates for FY19/20E by 3%/4%. Valuation at 16.1x/14.9x FY19/20E EPS are full in light of sub-par growth v/s peers. Retain REDUCE with TP of Rs 250 (valued at 13x FY20e earnings),” it added.

Wipro's revenue growth has been sluggish for quite some time, driven by combination of challenges in energy, healthcare and communications vertical and India and Middle East business, said analysts at Antique Stock Broking.

Management is confident of growth coming back from Q2FY19. However, the poor start to FY19 will ensure that the revenue growth will be below industry average in FY19. We maintain HOLD on the stock with a target price of Rs 315 based on 16x FY20 EPS, the brokerage firm said in Q4FY18 result review.

“We cut FY19/20 revenue (US$) forecast by 3%/3.7% and EPS by 10%/7.9%. We maintain to Reduce with a new TP of Rs278 based on 14x FY20E. We expect rerating, if any, only after clear signs of pick-up in revenue growth,” IDBI Capital said in result review.

“Q1FY19 IT services revenue growth guidance of -2.3% to +0.1% is a big miss vs. our expectation of 0% to +2%. This is expected to be impacted by the loss of revenue from the 2 insolvent clients and lower revenue in case of HPS along with the seasonal weakness in India & Middle East business,” added report.

At 09:46 am; the stock was trading 4% lower at Rs 277 on the BSE, as compared to 0.19% rise in the S&P BSE Sensex. A combined 3.07 million shares changed hands on the counter on the NSE and BSE so far.