New Delhi: Wipro, India's third largest IT outsourcer is likely to report muted growth in the June quarter. Wipro's results come after Infosys revising its dollar revenue growth forecast for this fiscal to 5 per cent, much lower than industry average of 11-14 per cent. Wipro and its larger rivals Infosys and Tata Consultancy Services are part of India's $100 billion software and back-office services sector that earns about 70 per cent of its revenue from the United States and Europe.
Shares in the company closed 1.9 per cent lower in a weak Mumbai market Monday. Wipro has underperformed the benchmark Sensex over the last quarter. Since April 23, the stock has fallen over 15 per cent, while the Sensex has shed less than 1 per cent in the same period.
Here are five key expectations from Wipro's earnings.
1) Sales and profit: Wipro, which also makes computer hardware, soaps and toiletries, is likely to report 6.5 per cent sequential rise in net sales at Rs 10,509 crore in the June quarter over Rs 9,869 crore in the March quarter. Net profit is likely to jump 10.8 per cent at Rs 1,641 crore against Rs 1,481 crore quarter-on-quarter. IT services revenues are seen to rise 7.9 per cent sequentially at Rs 8,186.5 crore against Rs 7,589.7 crore.
2) Dollar revenue: IT services revenue may decline 0.6 per cent quarter-on-quarter at $1527 million against $1536 million in dollar terms. The company had guided for $1520 million -1550 million in revenue implying a sequential growth ranging from -1 to 1 per cent.
3) Guidance: Analysts expect Wipro to forecast 2-3 per cent sequential growth (in dollar terms) for the second quarter ending September 30. Earlier, Infosys had stopped forecasting quarterly guidance citing rising uncertainty in global environment.
4) Volume: Wipro is expected to grow at less than 2 per cent in the June quarter. In contrast, Infosys reported a sequential volume growth of 2.7 per cent, while TCS volumes grew at a robust 5.3 per cent in the June quarter.
5) Margins: Earnings before interest, tax, depreciation and amortization (ebitda) margins, a key measure of profitability, is likely to expand by 120 basis points at 20.5 per cent against 19.3 per cent in the March quarter. Infosys margins declined by 200 basis points to 30.6 per cent, while TCS reported a 36 basis point decline in margins at 29.1 per cent in the June quarter.
Wipro is likely to report cross currency loss of 150 basis points, which is in-line with Infosys and TCS. The company's hedge book is likely at $2 billion. In terms of constant currency, the company is likely to report a revenue growth of 1 per cent against 1.3 per cent (quarter-on-quarter).
Shares in the company closed 1.9 per cent lower in a weak Mumbai market Monday. Wipro has underperformed the benchmark Sensex over the last quarter. Since April 23, the stock has fallen over 15 per cent, while the Sensex has shed less than 1 per cent in the same period.
Here are five key expectations from Wipro's earnings.
1) Sales and profit: Wipro, which also makes computer hardware, soaps and toiletries, is likely to report 6.5 per cent sequential rise in net sales at Rs 10,509 crore in the June quarter over Rs 9,869 crore in the March quarter. Net profit is likely to jump 10.8 per cent at Rs 1,641 crore against Rs 1,481 crore quarter-on-quarter. IT services revenues are seen to rise 7.9 per cent sequentially at Rs 8,186.5 crore against Rs 7,589.7 crore.
2) Dollar revenue: IT services revenue may decline 0.6 per cent quarter-on-quarter at $1527 million against $1536 million in dollar terms. The company had guided for $1520 million -1550 million in revenue implying a sequential growth ranging from -1 to 1 per cent.
3) Guidance: Analysts expect Wipro to forecast 2-3 per cent sequential growth (in dollar terms) for the second quarter ending September 30. Earlier, Infosys had stopped forecasting quarterly guidance citing rising uncertainty in global environment.
4) Volume: Wipro is expected to grow at less than 2 per cent in the June quarter. In contrast, Infosys reported a sequential volume growth of 2.7 per cent, while TCS volumes grew at a robust 5.3 per cent in the June quarter.
5) Margins: Earnings before interest, tax, depreciation and amortization (ebitda) margins, a key measure of profitability, is likely to expand by 120 basis points at 20.5 per cent against 19.3 per cent in the March quarter. Infosys margins declined by 200 basis points to 30.6 per cent, while TCS reported a 36 basis point decline in margins at 29.1 per cent in the June quarter.
Wipro is likely to report cross currency loss of 150 basis points, which is in-line with Infosys and TCS. The company's hedge book is likely at $2 billion. In terms of constant currency, the company is likely to report a revenue growth of 1 per cent against 1.3 per cent (quarter-on-quarter).
