Wipro’s shares hit a new 52-week low of Rs 370.10, a 1.5% decline in Thursday’s intra-day trade due to concerns over weak revenue growth for the January-March quarter (Q4FY23). The decline below the previous low of Rs 372.40, which was touched on October 17, 2022, comes amid a 38% drop in Wipro’s stock price over the past year, compared to a 1.4% fall in the S&P BSE Sensex.
Wipro’s Q3FY23 QoQ constant currency IT services revenue growth was 0.6%, lower than the estimated 1%. However, a margin expansion of 120bps to 16.3% was higher than the estimated 15.2%, according to analysts at Nirmal Bang Equities.
Wipro expects full-year revenue from its IT services to grow between 11.5% to 12% in CC terms. The guidance for Q4FY23 revenue growth is flattish to marginally negative in QoQ CC terms, and the margin is expected to improve QoQ. However, analysts at Emkay Global Financial Services anticipate revenue growth of -0.6% to 1% QoQ CC in IT services for Q4, indicating softer discretionary spending and slower revenue conversion due to macro uncertainties.
Wipro management has attributed the slower growth to a cutback in discretionary spending and a slow ramp-up of deals won. It is optimistic about revenue growth improving in the medium term without indicating when it sees it picking up.
According to Nirmal Bang Equities, growth could be a challenge in the April-June quarter (Q1FY24) due to cautious customer behaviour and the added issue of productivity concessions for some large clients. Despite a robust order book of $4.3 billion in total contract value (TCV), analysts at IDBI Capital anticipate lower discretionary spending, longer vendor consolidation, and macro uncertainties to impact near-term growth. Therefore, the brokerage firm expects FY24E revenue growth to be subdued (6.2% YoY) and then revived in FY25E (8.3% YoY).
