Wipro Ltd. - Q3 FY23 Earning Highlights | Globe Capital
15-Jan-2023
Wipro Ltd. – Q3 FY23 Earning Highlights

The Company has beats market expectations & maintained its double digit growth.  

Q3 FY23 Earning Overview and Verdict
CMP
Rs. 393
Verdict
Beat the market estimates

Earning Highlights Q3FY23:

  • The Company reported a 2.8% year-on-year (YoY) rise in consolidated net profit for the December quarter to Rs 3,053 crore.
  • Consolidated revenue for the quarter increased 14.3% YoY to Rs 23,229 crore, and was tad higher than the estimated Rs 23,180 crore.
  • Operating margin, improved by a sharp 120 basis points sequentially to 16.3%.
  • Operating Cash Flows at 142.5% of Net Income for the quarter was at ₹5 billion ($526.0 million), an increase of 44.7% YoY.
  • EPS for the quarter was at ₹5.57 ($0.071), an increase of 14.6% QoQ and 2.6% YoY.
  • Attrition Rate: The Company saw attrition rate trending lower. The voluntary attrition moderated 180 bps from the previous quarter to 21.2% for the trailing 12 months (TTM). The attrition rate was as high as 23.8% in the March quarter of FY22.
  • Interim Dividend: The Company announced the first interim dividend for the current financial year at Rs 1 a share.

Management Takeaways:

As per the management, the Company has delivered another quarter of double-digit revenue growth. Its Total Bookings were over $4.3 billion, led by solid large deal signings of over $1 billion. It improved its margins by 120 basis points and its attrition moderated for the fourth quarter in a row.

It is continuing to gain market share as a result of deepening client relationships and higher win rates. Clients are turning to the company to help them manage an evolving macro environment and balance their transformation goals with cost optimization. Its ability to deliver on client objectives regardless of where they are in their cloud journeys is positioning it favourably in a consolidating market.

Deal wins: The Company won deals worth $4.3 billion in the quarter, up by 26% YoY, with large deal bookings rising by 69% YoY. The growth in large deal booking was much stronger than the 24% growth reported for the September quarter.

The Company closed 11 large deals resulting in a TCV of over $1 billion, grew by 69% YoY in Q3’23.

Top 5 clients grew 15.7% YoY and top 10 clients grew 14.7% YoY in constant currency terms, underscoring deepening relationships with top strategic clients.

Future Guidance: The management expects Revenue from its IT Services business for the full year to be in the range of 11.5% to 12.0%, in constant currency terms.

This translates into the growth rate of -0.6% to 1.0% sequentially in constant currency terms for quarter ending March 31, 2023.

Valuation & View:

At the CMP of Rs. 393, the stock is trading at annualised P/E multiple of 20.7 times with the annualised EPS of Rs. 18.9, which is fairly valued.

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