Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
In line quarter, lite on guidance…
Wipro reported its Q4FY11 earnings, which were ahead of suppressed
expectations. IT services revenues were modestly ahead of our estimates
($1,400 million vs. $1,391 million estimate), led by 1.9% volume growth
and offshore & onsite price realisation improvements of 1.2% and 1.8%,
respectively. EBIT margins declined across segments leading to a 54 bps
decline in consolidated EBIT margins. However, what surprised us was
the Q1FY12 QoQ revenue growth guidance of (0.5%)-1.5% coupled with
12-15% offshore wage inflation, higher than industry average. This
suggests Wipro could be contemplating higher attrition for FY12. Further
investments in momentum verticals such as BFSI, healthcare, retail and
energy & utilities would likely entail higher costs and could pressure
operating margins. Consequently, we continue to maintain our HOLD
rating with a | 440 price target pending material improvements in the
revenue growth trajectory & operating metrics.
Earnings summary
Wipro reported 6% QoQ growth in consolidated revenues to |
8,300.6 crore. IT services revenues came in at US$1,400 million,
helped by volume growth (up 1.9% QoQ) and price realisation. The
consumer care business continues to perform well with 19% YoY
growth while IT products came in weak with 2.3% YoY growth.
Wipro’s consolidated EBIT margin declined 54 bps QoQ led by a
decline in EBIT margins across segments. IT services margin
declined 16 bps QoQ, consumer care by 29 bps and products by 99
bps. The company reported PAT of | 1,373.6 crore (| 1,328 crore
our estimate) on the back of higher other income of | 149 crore vs.
our | 106.1 crore estimate and higher revenues.
Valuation
We believe the overall revenue growth trajectory remains lacklustre,
primarily due to the services portfolio and would lag its peers. We expect
consolidated revenues to grow at 15% CAGR over FY10-FY13E. We value
the stock at 16x (18x FY12E earlier) FY13 EPS estimate of | 27.6 i.e. with a
target price of | 440 and maintain our HOLD rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
In line quarter, lite on guidance…
Wipro reported its Q4FY11 earnings, which were ahead of suppressed
expectations. IT services revenues were modestly ahead of our estimates
($1,400 million vs. $1,391 million estimate), led by 1.9% volume growth
and offshore & onsite price realisation improvements of 1.2% and 1.8%,
respectively. EBIT margins declined across segments leading to a 54 bps
decline in consolidated EBIT margins. However, what surprised us was
the Q1FY12 QoQ revenue growth guidance of (0.5%)-1.5% coupled with
12-15% offshore wage inflation, higher than industry average. This
suggests Wipro could be contemplating higher attrition for FY12. Further
investments in momentum verticals such as BFSI, healthcare, retail and
energy & utilities would likely entail higher costs and could pressure
operating margins. Consequently, we continue to maintain our HOLD
rating with a | 440 price target pending material improvements in the
revenue growth trajectory & operating metrics.
Earnings summary
Wipro reported 6% QoQ growth in consolidated revenues to |
8,300.6 crore. IT services revenues came in at US$1,400 million,
helped by volume growth (up 1.9% QoQ) and price realisation. The
consumer care business continues to perform well with 19% YoY
growth while IT products came in weak with 2.3% YoY growth.
Wipro’s consolidated EBIT margin declined 54 bps QoQ led by a
decline in EBIT margins across segments. IT services margin
declined 16 bps QoQ, consumer care by 29 bps and products by 99
bps. The company reported PAT of | 1,373.6 crore (| 1,328 crore
our estimate) on the back of higher other income of | 149 crore vs.
our | 106.1 crore estimate and higher revenues.
Valuation
We believe the overall revenue growth trajectory remains lacklustre,
primarily due to the services portfolio and would lag its peers. We expect
consolidated revenues to grow at 15% CAGR over FY10-FY13E. We value
the stock at 16x (18x FY12E earlier) FY13 EPS estimate of | 27.6 i.e. with a
target price of | 440 and maintain our HOLD rating.
No comments:
Post a Comment