Wipro Q2 Results 2024

Wipro Q2 Results Preview 2024: Revenue to Drop 2%, EBIT Margin Flat, Bonus Issue Eyed

1. Revenue and Margin Performance: Wipro’s Q2 revenue is expected to decline by 2% year-on-year (YoY), despite a potential rise in net profit by 9-12%. The primary reasons include softer deal wins and the impact of a one-month wage hike. The revenue guidance for the quarter was between -1% to +1%, and EBIT (Earnings Before Interest and Taxes) margins are predicted to remain flat, reflecting the wage hike’s impact on operational profitability.
2. Key Highlights of the Q2 Results:

• Net Profit Growth: Despite weaker revenue, net profit is estimated to grow by 9-12%, thanks to cost optimizations.
• EBIT Margins: Likely to be flat, as wage hikes are expected to absorb much of the operational gains.
• Bonus Issue of Shares: The board will consider a proposal for a bonus share issue, which is anticipated to be a major event.

3. Brokerage Expectations:

• Emkay Global: Expects a minor USD revenue growth of 0.9%, supported by cross-currency tailwinds. EBIT margins are expected to remain flat due to wage hikes.
• ICICI Securities: Predicts flat revenue growth, driven by continued pressure on discretionary spending, though consulting may see slight improvement.
• JM Financial: Sees minimal revenue growth driven by BFSI (Banking, Financial Services, and Insurance) but weakened by sectors like Energy & Utilities (E&U). The wage hike is expected to hinder margin growth.
• Motilal Oswal: Expects flat revenue and range-bound margins due to softness in key sectors like Communications, Manufacturing, and E&U.
• Phillip Capital: Expects flat revenue, with BFSI & healthcare leading growth but offset by weaker performance in E&U.

4. Wipro’s Stock Performance: Shares of Wipro have gained nearly 29.46% in the last year, trading at ₹532.25 apiece on the BSE. Despite the recent correction, Wipro’s stock has seen significant momentum over the past year.

Advantages of Wipro Q2 Results:

1. Steady Net Profit Growth: Despite challenges in revenue, Wipro is expected to maintain strong profit growth between 9-12%, signaling effective cost management and operational efficiencies.
2. Potential Bonus Issue: The proposed bonus issue of shares will likely attract investor interest, providing a boost to Wipro’s market appeal.
3. Strong Stock Performance: With a 29.46% growth in stock price over the past year, Wipro has outperformed expectations, reflecting investor confidence.
4. Cross-Currency Tailwinds: Favorable currency exchange rates will positively impact the revenue despite underlying weaknesses in deal flow.

Disadvantages of Wipro Q2 Results:

1. Revenue Decline: A 2% drop in revenue is concerning, reflecting weak deal activity and continued pressure from discretionary spending cuts.
2. Flat EBIT Margins: Despite wage hikes, the company’s margins are expected to be flat, indicating limited operational improvements.
3. Sectoral Weakness: Continued softness in critical sectors like Communications, Manufacturing, and Energy & Utilities may weigh on future performance.
4. Wage Hike Impact: The one-month wage hike will likely dampen any potential margin expansion for this quarter.

Conclusion:

Wipro’s Q2 results are expected to present a mixed bag, with net profit growth being a bright spot amidst a decline in revenue and flat margins. The wage hike’s impact on profitability, combined with softness in sectors like Communications and E&U, will remain key concerns. However, a potential bonus share issue and Wipro’s solid stock performance over the past year could drive positive investor sentiment. The outlook for Q3 will depend on factors like new deal wins, consulting performance, and margin recovery strategies.

FAQs:

1. What is the expected revenue growth for Wipro in Q2FY25? Wipro’s revenue is expected to decline by 2% year-on-year due to weaker deal activity and a wage hike impact.
2. Will Wipro issue bonus shares? Wipro’s board is considering a proposal for a bonus share issue during the Q2 board meeting, which is likely to attract significant investor interest.
3. How much is Wipro’s net profit expected to grow? Wipro’s net profit is expected to rise by 9-12% YoY, despite a drop in revenue.
4. What are the key factors affecting Wipro’s margins? A one-month wage hike, along with sectoral weakness in Communications, Manufacturing, and Energy & Utilities, is expected to keep EBIT margins flat.
5. How has Wipro’s stock performed recently? Wipro’s shares have rallied 15.85% over the last six months and nearly 29.46% over the past year, reflecting strong investor confidence.

Wipro Q2 Results 2024

L&T Technology Services Q2 Results: ₹319.6 Crore Net Profit, ₹17 Interim Dividend