Wipro reported a strong performance in 3QFY23 with IT services EBIT margin coming in at 16.3%, 152bps above our estimate of 14.8%.
IT Services – Revenue remained flat on QoQ basis (up 6% YoY) CC in USD to US$2.8bn, broadly in line with our estimate of US$2.82bn. Sequential constant currency growth came in at 0.6% vs. our estimate of 1.4%.
IT Services – EBIT grew by 11% QoQ (up 6% YoY) to Rs37.5bn while EBIT margin stood at 16.3% (up 115bps QoQ /down 130bps YoY), 152bps above our estimate of 14.8%.
Its net income stood at Rs34.5bn (up 30% QoQ/up 16% YoY), 20% higher than our estimate of Rs28.8bn, while adjusted margin came in at 15% vs. our estimate of 12.3%.
Total Bookings4 up by 26% and large deal bookings5 up by 69% YoY.
Voluntary attrition6 moderated 180bps QoQ to 21.2% for the TTM in 3QFY23.
The company expects revenue from IT Services business for the full year to be in the range of 11.5% to 12.0%, in constant currency terms.
Our View: Wipros’ revenue was broadly in line with our expectations while its margins were above our expectation. Its restructuring efforts, which include simplified operating structure, step-up in capability upgrade and talent management under new leadership bode well for Wipro in the medium-term. TTM attrition has also started falling supporting margin expansion. At present we have a BUY rating on WPRO.