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MOSL: Morning India (16/October/19): 1. Wipro (Largely in line; lower ETR drives a beat in profitability); 2. ACC; 3. Coromandel Intl; 4. MCX; 5. Delta Corp; 6. Fund Folio; 7. EcoScope

MOrning India (16/October/19): 1. Wipro (Largely in line; lower ETR drives a beat in profitability); 2. ACC; 3. Coromandel Intl; 4. MCX; 5. Delta Corp; 6. Fund Folio; 7. EcoScope

 

Today’s top research idea

Wipro: Largely in line; lower ETR drives a beat in profitability

• WIPRO's revenue grew 1.3% QoQ CC and EBIT margin stood at 18.7%. Operationally, the result was marginally below our estimate, led by a sequential decline in BFSI (after two years of double-digit momentum) and a decline in India-specific communication segment.
• WIPRO cited weakness in capital markets across the US and Europe, similar as peers. However, unlike TCS and INFY, it expects a moderate performance in consumer segment.
• Revenue from the top client declined 11.8% YoY, led by the non-renewal of projects and the delay in ramp-ups. Overall, the weak performance of the top BFS clients was offset by healthy spends from clients across other verticals. WPRO's utilization dipped during the quarter as it build on bench to leverage deal wins, putting pressure on margins. Further, the one-time positive impact in G&A should reverse, exerting pressure on margins for 2H. However, the lower ETR offset the marginal change in operational estimates, driving an EPS increase of 3% on FY20 earnings.

Piping hot news

Cut rates, reform more to revive economy: IMF’s advice to India

India should opt for further monetary policy easing and broad-based structural reforms to reverse a cyclical demand slowdown, the International Monetary Fund (IMF) said on Tuesday while slashing its growth projection for the country to 6.1% for the current fiscal from its July forecast of 7%. “In India, growth softened in 2019 as corporate and environmental regulatory uncertainty, together with concerns about the health of the non-bank financial sector, weighed on demand," IMF said in its biannual World Economic Outlook (WEO).