Key Points:

• Mutual funds reduced their holdings in Wipro shares ahead of the company’s Q1 results.
• Domestic fund managers owned 12.65 crore shares in Wipro as of June 30, compared to 13.90 crore shares as of May 30.
• In value terms, the holding value of mutual funds in Wipro decreased from Rs 5,611 crore at the end of May to Rs 4,922 crore at the end of June.
• Analysts have low expectations for Wipro’s Q1 earnings due to anticipated revenue decline.
• Wipro’s revenue decline is expected to be driven by weakness in financial services, hi-tech vertical, and consulting business.
• Emkay Global predicts Wipro to guide for flat (minus 1 per cent to 1 per cent) CC QoQ revenue growth for Q2FY24.
• Wipro’s Q1 profit is estimated to be Rs 3,091 crore, up 20.6 per cent YoY or 0.5 per cent sequentially.
• Dollar revenues are expected to be $2,783 million, up 1 per cent YoY but down 2 per cent sequentially.
• Ebit margin is projected at 16.1 per cent, down 10 basis points QoQ but up 130 basis points YoY.

Article:

Mutual funds reduced their exposure to shares of Wipro in anticipation of the company’s quarterly results, scheduled to be announced on July 13. According to ICICI Securities, domestic fund managers owned 12.65 crore shares in Wipro as of June 30, down from 13.90 crore shares as of May 30. The value of their holdings in Wipro also decreased from Rs 5,611 crore at the end of May to Rs 4,922 crore at the end of June.

Wipro’s share price experienced a decline of 3.65 per cent in June, following a 4.84 per cent rise in May and a 5.43 per cent increase in April. Analysts have tempered their expectations for the company’s Q1 earnings, citing a weak macro environment and reduced discretionary spending. Dhruv Mudaraddi, a Research Analyst at Stoxbox, expects Wipro’s constant currency (CC) revenue to decline by 3-5 per cent sequentially for the quarter, primarily due to weakness in the financial services and hi-tech verticals, as well as softness in the consulting business.

“It would be interesting to see if the weakness has spread to other verticals as well. We expect a corresponding decline in margins, approximately 10-15 basis points. Our focus will be on the management’s commentary regarding growth guidance, demand outlook, large deal wins pipeline, BFSI vertical outlook, and EBIT margin outlook,” Mudaraddi stated.

Emkay Global predicts that Wipro will guide for flat (minus 1 per cent to 1 per cent) CC QoQ revenue growth for Q2FY24. The brokerage expects Wipro’s Q1 profit to reach Rs 3,091 crore, representing a 20.6 per cent YoY increase or a 0.5 per cent sequential increase. Dollar revenues are projected to be $2,783 million, up 1 per cent YoY but down 2 per cent sequentially. The Ebit margin is anticipated to be 16.1 per cent, down 10 basis points QoQ but up 130 basis points YoY.

All eyes will be on Wipro’s Q1 results, with investors closely monitoring the guidance on revenue growth, large deal wins, and management commentary on the EBIT margin.