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What would be your take on Wipro Q3 results? There is a slight bit of miss if at all as far as top line is concerned and the growth outlook for Q4 is also not very exciting though the margin beat is quite comforting?
I agree revenue is broadly in line with estimates. Only positive note margin has really surprised with high jump, more than 100 basis improvement sequentially as against expectation of marginal improvement in the range of 40 to 50 bps. But as indicated in the press note, attrition has come down significantly. That is benefiting on the profitability front but for outlooks, we need to gaze at the detail from the management commentary.
But if we look at the geography-wise details, Europe has reported decent growth on a Q-on-Q basis sequentially, despite everyone being worried about Europe. Surprisingly, the company’s Europe growth is higher than America and that is the key thing to watch out for in terms of whether anything one-time or any new order wins or ramp up of any particular deal is supporting the European region.
But of course, this growth guidance for the full year indicates lower growth or moderation in Q4 numbers which is something we need to consider as a key challenge for the time.
What will be your pecking order as far as the entire sector is concerned since we have seen the results from the top four IT companies?
Our top pick would remain
which we have been bullish on since the last two-three quarters. Within the IT pack, we like Infosys only and last quarter we upgraded from hold to buy.
The second bet would be HCL Tech. For , we have a sell recommendation. For Wipro, we have buy but after this result commentary, we would able to come out with details in terms of whether we will maintain the positive stance or target price or not. It would be based on the management commentary because it has also run up from the low level. So the upside is very limited from the current level for Wipro also.
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