MOSL: WIPRO (Neutral)-Revenue beat offset by 2Q guidance-Announces INR110b buyback
​Wipro: Revenue beat offset by 2Q guidance; Announces INR110b buyback
(WPRO IN, Mkt Cap USD20.3b, CMP INR269, TP INR270, 0% Upside, Neutral)
- Revenue exceeds estimate and guidance: 1QFY18 CC revenue growth stood at 0.3% QoQ, ahead of our estimate of -1% QoQ and also marginally exceeded the company's guidance of -2% to 0% QoQ. However, growth was lopsided and came from India/ME/APAC/Emerging markets, while the core markets of the US (flat) and Europe (decline) were relatively muted. IT Services EBIT margin shrunk 90bp QoQ to 16.8%, in line with our estimate, but with slightly higher currency realization of INR66.1 v/s our assumed rate of INR65.5. PAT rose 7.4% QoQ to INR20.8b, above our estimate of INR18.6b, led by above-estimate revenues and other income.
- 2QFY18 guidance offsets 1Q beat: For 2QFY18, WPRO expects revenue of USD1,962-2,001m, implying QoQ CC growth between -0.5% and +1.5%. This is below our 2QFY18 growth estimate of 1.8% QoQ, offsetting the 1Q beat. The larger geographies of Europe and the US are expected to chip in. However, it expects to catch up with the industry by 4QFY18. WPRO expects to contain margins in a narrow band of 17.5-18%, which it achieved in FY17.
- Announces INR110b buyback: WPRO announced buyback of 343.75m equity shares (7.06% of paid up equity) at INR320 per share - totaling to INR110b. This amounts to more than 50% of net cash if we include short-term loans and borrowings amounting to INR123b. The promoters have also expressed their intention to participate in the proposed buyback.
Wipro is an information technology group based in India. Co. is engaged in the provision of information technology services. Co. is active as a global IT services company that provides a range of IT services, software solutions, IT consulting, business process outsourcing, or BPO, services and research and development services in the areas of hardware and software design to companies worldwide. Co. also provides outsourced research and development, infrastructure outsourcing and business consulting services. Co.operations are organized along two business segments: IT Services and IT Products.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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