Billionaire investor Azim Premji promoted Wipro, India's third largest IT services company, disappointed the Street with Q4 sales and revenue guidance for the first quarter of FY13.
The stock closed 7.3 per cent lower at Rs 410.15 on the BSE, while the Sensex declined 0.33 per cent to 17,194.5.
Here are five reasons why Wipro shares have fallen today. (Also read: Wipro sales below expectations, net rises)
1) The company has reported lower than expected sales for the fourth quarter. Sales declined 1.6 per cent to Rs 9,836.3 crore against Rs 9,999 crore (QoQ). Analysts had expected sales to rise at Rs 10,138.5 crore.
2) In dollar terms, the company's Q4 IT services sales rose 2 per cent at $1536 million against $1505 million (QoQ). The company had guided for revenue growth of $1520 million - $1550 million but it could not meet the higher end of its guidance, which the Street expected.
3) The company's revenue guidance for the first quarter ending June 2012 dampened sentiments. Wipro said it expects IT services revenue to grow to $1520 million -$1550 million, which implies no growth to marginal growth.
4) The company has reported a decline in employee headcount QoQ.
5) Non-IT business revenue seems to have done poorly on topline, brokerage firm Barclays said in a research note.
Brokerages turned negative on the stock after Q4 earnings:
a) UBS: Expect stock to weaken on back of the weaker than expected Q1 guidance, which is slightly below Infosys guidance.
b) Nomura: Not convinced of growth rebound. Prefer HCL Tech in the IT space.
c) Barclays: Prefer Infosys on valuation in large cap IT stocks.