| Result Analysis: Wipro Ltd. (CMP: Rs.394.35) | Result Update: Q1FY24 |
Wipro Limited is a leading technology services and consulting company focused on building innovative solutions that address clients’ most complex digital transformation needs.Wipro Limited is a leading technology services and consulting company focused on building innovative solutions that address clients’ most complex digital transformation needs. Leveraging its holistic portfolio of capabilities in consulting, design, engineering, and operations, the company helps clients realize their boldest ambitions and build future-ready, sustainable businesses. With around 250,000 employees and business partners across 65 countries, the company delivers on the promise of helping its clients, colleagues, and communities thrive in an ever-changing world.
| Stock Details | |
| Market Cap. (Cr.) | 216452.48 |
| Equity (Cr.) | 1097.77 |
| Face Value | 2 |
| 52 Wk. high/low | 445 / 352 |
| BSE Code | 507685 |
| NSE Code | WIPRO |
| Book Value (Rs) | 141.50 |
| Sector | IT – Software |
| Key Ratios | |
| Debt-equity: | 0.25 |
| ROCE (%): | 17.11 |
| ROE (%): | 15.89 |
| TTM EPS: | 20.68 |
| P/BV: | 2.80 |
| TTM P/E: | 19.07 |
Result Highlights:
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Wipro reported a decline of 1.5% in revenues on a sequential basis to Rs.22,831 cr. along with a decline in Net profits of 6.7% QoQ to Rs.2,886 cr. in the first quarter of FY24. The revenue increase was hampered by a worse macroeconomic climate and declining discretionary spending. The company anticipates further revenue softening.
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EBIT of the company declined by 70 bps QoQ largely led by higher operating expenses; this resulted in an EBIT margin of 15.1%, which is down from 15.8% in the previous quarter.
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On the vertical front, the BFSI, Technology, and Communication verticals delivered a discouraging QoQ growth of -3.5%, 0.9%, and 0.1% respectively. Energy & Utility de-grew by 3.6% QoQ while Manufacturing and Hi-tech verticals reported growth of 1.4% and 5.4% QoQ respectively. The majority of the verticals had flat growth, but they are expected to post higher numbers in the future, supported by a promising deal pipeline.
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On the geographical front, while America 1 declined by 1.0% QoQ, America 2 declined by 3.7%, Europe de-grew by 1.5% QoQ, and APEMA business de-grew by 2.5% QoQ (in CC terms).
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TCV agreements increased by 9% YoY to $1.2 billion marking the largest bookings in the previous eight quarters. Bookings for TCV as a whole were $3.7 billion. The TCV for orders in America increased 37% YoY. Bookings in TCV for APMEA increased by 23% QoQ.
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A QoQ reduction of 8,812 was reported for the total headcount of 2,49,758. Attrition reached a low of 14% after 8 quarters. Net utilization was 83.7%, up from the prior quarter.
Financial Performance:
Shareholding Pattern:
| Particulars (In %) | Q4FY23 | Q1FY23 |
| Promoters’ Group | 72.92 | 73.00 |
| FIIs | 7.37 | 7.75 |
| DIIs | 10.39 | 3.43 |
| Public | 8.50 | 14.97 |
| Others | 0.82 | 0.85 |
Management Commentary:
“Wipro’s first quarter results come with a strong backbone of large deal bookings, robust client additions, and resilient margins,” said Thierry Delaporte, CEO and Managing Director. “Despite a gradual reduction in clients’ discretionary spending, we maintained new business momentum. We earned our clients’ trust with strong delivery, innovation, and expanded services that strengthen our long-term businesses, and help capture market share. The launch of Wipro ai360 and the USD 1 billion investment solidifies Wipro’s position as a leading transformation partner that delivers the results and innovation our clients need to future-proof their businesses.”
Outlook:
Wipro reported declination in earnings for Q1FY24 majorly due to the ongoing uncertainties which are resulting in delays in decision-making by clients, especially on automation spending. On the positive side, the company’s TCV was a healthy $3.1 billion in Q1FY24, and the management is optimistic about picking up speed in H2FY24. The company’s lack of future revenue growth visibility raises questions about its growth trajectory compared to those of its competitors. Wipro has a solid transaction pipeline and an excellent financial structure over the long run. However, compared to others, it lags in execution skills for capitalising on growth. Additionally, the company’s short-term growth rates are unpredictable due to growing worries about the future of global economies as well as current supply-side restrictions.
Results:
| Particulars (In Rs. Cr.) | Q1FY24 | Q4FY23 | Q1FY23 | QoQ% | YoY% |
| Revenue from Operations | 22,831 | 23,190 | 21,529 | -1.5% | 6.0% |
| Other Income | 648 | 645 | 472 | 0.4% | 37.2% |
| Total Income | 23,479 | 23,836 | 22,001 | -1.5% | 6.7% |
| Employee Benefit Expenses | 14,028 | 13,808 | 12,613 | 1.6% | 11.2% |
| Employee benefit Expenses as % of Sales | 61.4% | 59.5% | 58.6% | 190 bps | 280 bps |
| Sub-contracting and technical fees | 2,639 | 2,818 | 2,945 | -6.4% | -10.4% |
| Software license expense for internal use | 461 | 444 | 458 | 3.7% | 0.7% |
| Depreciation, amortization, and impairment expense | 738 | 847 | 774 | -12.8% | -4.6% |
| Other Expenses | 1,507 | 1,615 | 1,263 | -6.7% | 19.3% |
| EBIT | 3,459 | 3,659 | 3,475 | -5.5% | -0.5% |
| EBIT Margin | 15.1% | 15.8% | 16.1% | -70 bps | -100 bps |
| Profit After Tax (PAT) | 2,886 | 3,094 | 2,559 | -6.7% | 12.8% |
| PATM (%) | 12.6% | 13.3% | 11.9% | -70 bps | 70 bps |
| EPS (in Rs.) | 5.23 | 5.61 | 4.69 | -6.8% | 11.5% |
| Segment Revenue % | Q1FY24 | Q4FY23 | Q1FY23 | QoQ | YoY |
| BFSI | 33.9% | 34.4% | 35.5% | -50 bps | -160 bps |
| Consumer | 18.7% | 18.9% | 18.6% | -20 bps | 10 bps |
| Health | 12.2% | 12.1% | 11.4% | 10 bps | 80 bps |
| Energy, Natural Resources and Utilities | 12.0% | 12.2% | 11.1% | -20 bps | 90 bps |
| Technology | 11.3% | 10.9% | 11.7% | 40 bps | -40 bps |
| Manufacturing | 7.3% | 7.0% | 6.7% | 30 bps | 60 bps |
| Communications | 4.6% | 4.5% | 4.9% | 10 bps | -30 bps |
| Geography Revenue % | Q1FY24 | Q4FY23 | Q1FY23 | QoQ | YoY |
| Americas 1 | 28.8% | 28.5% | 28.7% | 30 bps | 10 bps |
| Americas 2 | 30.0% | 30.5% | 31.1% | -50 bps | -110 bps |
| Europe | 29.5% | 29.3% | 28.2% | 20 bps | 130 bps |
| APMEA | 11.7% | 11.7% | 12.0% | 0 bps | -30 bps |
Source: Company website, EWL Research
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