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T o o e a r l y t o b e s a n g u i n e ?
Wipro reported Q2FY12 revenues, which were ahead of our estimate but
EBITDA margin and reported PAT were a tad below. US$ revenue growth
of 4.6% QoQ to $1472.5 million did beat its own 2-4% guidance but was
lethargic in a seasonally strong quarter given it was aided by SAIC‘s
contribution. Organic volume growth of 4.6% was also in line with peers
while Q3FY12 revenue growth guidance of 1.9-3.9% was tepid.
Acknowledging that the operational performance improved this quarter,
we believe, a quarterly performance cannot be construed as restructuring
effort payoff and multiple re-rating demands consistent outperformance
relative to peers.
ƒ Earnings summary
Consolidated revenues grew 6.2% QoQ and 17.6% YoY to | 9,095
crore (I-direct estimate:| 8,855.4 crore). IT services revenues grew
4.6% QoQ to $1,472.5 million vs. our $1,423 million estimate.
Consolidated EBITDA margins declined 120 bps QoQ to 18.9% (19%
estimate) mainly due to wage hikes (given in June) and promotions
given this quarter. Reported PAT of | 1,300.9 crore (| 1,308 crore
estimate) declined 2.6% QoQ and was modestly below our estimate.
The consumer care business continues to perform well with 20.3%
YoY revenue growth while IT product YoY revenue growth was
tepid at 6.4%.
ƒ Price realisations continue to be a challenge
Price realisations continue to be a challenge with offshore pricing
declining 4.1% QoQ – it had declined 0.4% in Q1FY12 while onsite
pricing declined by 0.4% vs. 0.8% decline in Q1 and could likely be
attributed to revenue growth driven by infrastructure services.
V a l u a t i o n
We expect consolidated rupee revenue/EPS to grow at 14.6/10.8% CAGR
during FY10-FY13E. Further, we are modelling 14.5% CAGR growth in IT
service revenues in rupee terms during the same period. We continue to
value the stock at 14x our FY13E EPS estimate of | 25.7, i.e. at | 360 and
maintain our HOLD rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
T o o e a r l y t o b e s a n g u i n e ?
Wipro reported Q2FY12 revenues, which were ahead of our estimate but
EBITDA margin and reported PAT were a tad below. US$ revenue growth
of 4.6% QoQ to $1472.5 million did beat its own 2-4% guidance but was
lethargic in a seasonally strong quarter given it was aided by SAIC‘s
contribution. Organic volume growth of 4.6% was also in line with peers
while Q3FY12 revenue growth guidance of 1.9-3.9% was tepid.
Acknowledging that the operational performance improved this quarter,
we believe, a quarterly performance cannot be construed as restructuring
effort payoff and multiple re-rating demands consistent outperformance
relative to peers.
ƒ Earnings summary
Consolidated revenues grew 6.2% QoQ and 17.6% YoY to | 9,095
crore (I-direct estimate:| 8,855.4 crore). IT services revenues grew
4.6% QoQ to $1,472.5 million vs. our $1,423 million estimate.
Consolidated EBITDA margins declined 120 bps QoQ to 18.9% (19%
estimate) mainly due to wage hikes (given in June) and promotions
given this quarter. Reported PAT of | 1,300.9 crore (| 1,308 crore
estimate) declined 2.6% QoQ and was modestly below our estimate.
The consumer care business continues to perform well with 20.3%
YoY revenue growth while IT product YoY revenue growth was
tepid at 6.4%.
ƒ Price realisations continue to be a challenge
Price realisations continue to be a challenge with offshore pricing
declining 4.1% QoQ – it had declined 0.4% in Q1FY12 while onsite
pricing declined by 0.4% vs. 0.8% decline in Q1 and could likely be
attributed to revenue growth driven by infrastructure services.
V a l u a t i o n
We expect consolidated rupee revenue/EPS to grow at 14.6/10.8% CAGR
during FY10-FY13E. Further, we are modelling 14.5% CAGR growth in IT
service revenues in rupee terms during the same period. We continue to
value the stock at 14x our FY13E EPS estimate of | 25.7, i.e. at | 360 and
maintain our HOLD rating.
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