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Published: Apr 26, 2023
Updated: Apr 26, 2023

Wipro Set to Unveil Q4 Earnings and Buyback Plan; Focus on FY24 Guidance

Wipro, the IT giant backed by Azim Premji, is gearing up to announce its fourth-quarter earnings for FY23. The market eagerly awaits the financial results, as well as details about the company's buyback plan. Additionally, the announcement of any potential dividend will be closely watched, following similar moves by Wipro's competitors. Let's explore the key factors to look out for in Wipro's Q4 earnings, the buyback plan, and the outlook for FY24.

Buyback Plan and Dividend Speculations:

Wipro's board members have convened for a two-day meeting to review and approve the buyback plan and Q4FY23 figures. This will be the company's first buyback since January 2021, when it repurchased shares worth ₹9,500 crore. While no hints have been given regarding a dividend announcement, Wipro's peers, such as TCS, Infosys, and HCL Tech, have recently declared dividends. Therefore, the possibility of a dividend announcement from Wipro remains a key point of interest.

Expectations for Q4 Earnings:

Q4 is typically a seasonally weak period for Wipro due to fewer working days and potential furlough impacts. The company has faced additional pressures in its IT services segment due to weak macros in certain sectors like US retail, technology companies, and investment banking. As a result, Q4 revenues are expected to decline by 0.5% quarter-on-quarter (QoQ) in constant currency (CC). However, the inclusion of cross-currency tailwinds is projected to result in a 0.5% QoQ increase in dollar revenues. In rupee terms, revenues are anticipated to rise by 0.5% QoQ.

Margin and Financial Outlook:

Despite some tailwinds, including reduced attrition rates, Wipro is likely to report a 30 basis points decline in QoQ EBIT margin for its IT services segment. Weak revenues, lower utilization, and incremental expenses such as facility costs contribute to this decline. Delays in decision-making and deal closures due to cautious client stances have also impacted the company. Analysts estimate Q4 revenues to be around ₹23,494.7 crore, with EBITDA at ₹4,619 crore and PAT at ₹3,040.5 crore.

Analysts' Projections and Monitored Factors:

Analysts from different brokerages offer varying predictions. One expects flat CC revenue growth within Wipro's guided range of -0.6% to 1%. EBIT margins are projected to decline by 40 basis points due to factors such as higher sub-contracting costs and limited scope for increased utilization. Another brokerage anticipates a 2.6% QoQ revenue growth, supported by strong deal wins, and a slight improvement in margins driven by volume growth and effective execution. Key factors to monitor include management commentary on new deal ramp-up, visibility for the future, client budget updates, and growth and margin guidance for FY24.

Cautious client behaviour and reduced discretionary spending bring an end to the Golden Period for IT sector

Investors and market participants eagerly await Wipro's Q4 earnings announcement, buyback plan details, and insights into the company's outlook for FY24. The IT services sector faces challenges, such as weak macros and cautious client behavior, which may impact Wipro's financial performance. Nevertheless, factors like strong deal wins and effective execution provide some optimism. With Wipro's past achievements, the market will closely follow the company's strategic moves and guidance to gauge its trajectory going forward.