MOSL: WIPRO (Neutral)-Less dark, but not bright yet
Wipro: Less dark, but not bright yet
(WPRO IN,Mkt Cap USD18.6b, CMP INR284, TP INR300, 6% Upside, Neutral)
- At the higher end of guidance: WPRO's 0.1% QoQ CC growth in IT services was better than our estimate of 1% de-growth and at the upper end of its guided range of -2% to 0%. Excluding gains from the sale of its data center business to Ensono, IT services EBIT margin at 15.6% was largely in line with our estimate of 15.8%. Adjusted PAT at INR18.4b was down 8% QoQ, a miss to our estimate of +2%, as profitability took a hit in the Products business.
- Lesser problems this time around: Growth in the quarter as expected was driven by BFSI (3% QoQ CC) and Retail (2.6% QoQ CC), but client bankruptcies, pressure in HPS and restructuring in India did take their toll. Going forward, WPRO is left with continued challenges in HPS and India, barring which its core business has been benefiting from an improved environment and client mining efforts.
- Expect improvement going forward: Although the guidance of 0-2% QoQ CC for 2QFY19 failed to enthuse, it implies a stemming of the downward trend on a YoY basis (2.6-4.7% YoY CC for 2Q v/s 2.6% YoY CC achieved in 1Q). Margins in the quarter were flattish excluding one-time restructuring expense, the reversal of which, combined with productivity improvement and uptick in revenue growth, should result in improvement hereon.
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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