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Wipro
Wipro reported its 3QFY2011 numbers, which were below street as well as our expectations
on all the fronts. The company reported IT services revenue at US $1,344mn (v/s our
expectation of US $1,350mn), up 5.6% qoq. Volume growth for IT services was muted at
1.5% due to merely 0.5% offshore and 4% onsite volume growth. The company managed to
garner better price points offshore with 2.5% qoq growth. In INR terms, IT services revenue
came in at `5,949cr (v/s our expectation of `5,932cr), up merely 3.5% qoq. Overall
consolidated revenue came in at `7,829cr (v/s our expectation of `7,972cr), merely 1.3%
qoq growth. This is because IT services growth was muted and the IT products segment
declined largely by 13.1% yoy. Overall EBITDA and EBIT margins increased by 29bp and
18bp qoq to 21.0% and 18.3%, respectively, as the proportion of low-margin IT products
business declined by 260bp qoq to 11.2%. PAT came in at `1,319cr qoq (v/s our expectation
of `1,348cr), up 2.7% qoq, on the back of lower profitability. The guidance for IT services for
4QFY2011 is muted at US $1.38bn–1.41bn with 3–5% qoq growth only. Also, management
changes took place as Mr. Suresh Vaswani and Mr. Girish Paranjpe stepped down as CEOs
and Mr T.K. Kurien will take over as CEO now. The results were disappointing and the
guidance looks muted considering the upbeat environment for IT spending. We maintain
Accumulate on the stock with a Target Price of `507.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Wipro
Wipro reported its 3QFY2011 numbers, which were below street as well as our expectations
on all the fronts. The company reported IT services revenue at US $1,344mn (v/s our
expectation of US $1,350mn), up 5.6% qoq. Volume growth for IT services was muted at
1.5% due to merely 0.5% offshore and 4% onsite volume growth. The company managed to
garner better price points offshore with 2.5% qoq growth. In INR terms, IT services revenue
came in at `5,949cr (v/s our expectation of `5,932cr), up merely 3.5% qoq. Overall
consolidated revenue came in at `7,829cr (v/s our expectation of `7,972cr), merely 1.3%
qoq growth. This is because IT services growth was muted and the IT products segment
declined largely by 13.1% yoy. Overall EBITDA and EBIT margins increased by 29bp and
18bp qoq to 21.0% and 18.3%, respectively, as the proportion of low-margin IT products
business declined by 260bp qoq to 11.2%. PAT came in at `1,319cr qoq (v/s our expectation
of `1,348cr), up 2.7% qoq, on the back of lower profitability. The guidance for IT services for
4QFY2011 is muted at US $1.38bn–1.41bn with 3–5% qoq growth only. Also, management
changes took place as Mr. Suresh Vaswani and Mr. Girish Paranjpe stepped down as CEOs
and Mr T.K. Kurien will take over as CEO now. The results were disappointing and the
guidance looks muted considering the upbeat environment for IT spending. We maintain
Accumulate on the stock with a Target Price of `507.
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