Wipro, Infosys rise ahead of Q3 results today. Here’s what analysts say

Wipro, Infosys rise ahead of Q3 results today. Here's what analysts say

NEW DELHI: Shares of Infosys and Wipro traded up to 1 per cent higher in Wednesday’s trade ahead of the IT majors’ December quarter results later in the day.

By 10 am, shares of Wipro were up 0.96 per cent at Rs 462.10 while those of Infosys were ruling 0.21 per cent higher at Rs 1,374.750 on BSE.

Infosys may report a strong set of numbers for the third quarter of the current financial year, with incremental revenues coming from the Vanguard deal. Margins may take a hit on wage hikes for junior employees during the quarter. Analysts said the IT major may raise its annual revenue growth forecast and the management’s take on how margins will play out in the context of large deals will be watched closely.

Brokerage Nirmal Bang sees constant currency growth for Infosys at 2.5 per cent sequentially, and dollar revenue growth at 3.1 per cent. PAT is seen climbing 18.3 per cent YoY (8.8 per cent QoQ) to Rs 5,274 crore. The company’s Ebit margin is seen shrinking to 21.9 per cent from 25.3 per cent in the September quarter, and 24.4 per cent in the year-ago quarter.

In case of Wipro, HDFC Institutional Research expects a 5.6 per cent YoY (5.1 per cent QoQ) growth in net profit at Rs 2,593 crore. Sales are seen rising 1.1 per cent YoY (up 3.5 per cent QoQ) to Rs 15,643 crore. Ebit margin may expand 134 basis points YoY (down 3 bps QoQ) to 18.5 per cent. Dollar revenue growth is seen falling 1.5 per cent YoY (up 3.5 per cent QoQ) to $2,062 crore, HDFC Institutional Research projected.

During the quarter, Wipro announced a $1 billion (9-year) deal with Metro AG. As a part of this transaction, Wipro will take over the IT units of METRO AG — METRO-NOM GMBH in Germany and METRO Systems Romania S.R.L. Through this partnership, more than 1,300 employees across Germany, Romania and India will transfer to Wipro. The IT major also announced deals with Marelli, Fortnum and ThoughSpot.

“We expect 2.5 per cent QoQ CC revenue growth with 50 bps cross currency tailwinds. Wipro had guided for revenue growth to be in the range of 1.5-3.5 per cent QoQ in CC terms. We expect IT Services’ EBIT margins to decline 30 bps sequentially to 19 per cent due to promotions and salary hikes given to high performers w.e.f. December 2020,” Emkay Global said.

This brokerage expects Wipro to guide 1-3 per cent growth for the March quarter. All eyes would be on Calendar 2021 IT budget outlook, demand trends in key verticals like BFSI, consumer, manufacturing, health and E&U. Updates on the new operating model, margin outlook and deal intake and pipeline would also be keenly watched, analysts said.

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