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At a time when IT exporters have voiced growth concerns, Wipro has maintained its guidance and is bullish about its prospects for the upcoming financial year. However, Wipro believes that some sectors are witnessing pullback in terms of capex and discretionary spending.
Talking to analysts on ‘Wipro Analyst Day’, the top management said it will maintain its guidance of $1.814 million - $1.850 million on constant currency basis. This translates to 1-3 per cent growth.
These comments come at a time when peers like TCS and Mindtree have issued cautions regarding revenue growth in the fourth quarter results due to currency volatility as well as client specific pullbacks on certain projects.
Steady demandWhile Wipro has said that outsourcing demand is 'steady', it added that on back of significant movement in the cross currency over the past three months, the company expects an impact between 200-250 basis points or 2-2.5 per cent. In comparison, the company had posted a 3.7 per cent quarterly growth on constant currency basis in the third quarter of the 2015 financial year.
Analysts like Sarabjit Kour Nangra, VP Research – IT for Angel Broking continue to maintain a neutral rating on the stock, which is neither a buy or a sell. Wipro stocks ended the day marginally down at ₹654 compared to the previous day. Addressing analysts, TK Kurien, CEO and Member of the Board for Wipro, said that the global market for IT services continues to grow and there is considerable opportunity in traditional outsourcing, estimated at $834 billion, along with new areas such as open source, IoT, AI amongst other technologies.
Global factorsDespite this opportunity, global macro economic factors are expected to continue to play spoilsport in its energy and utilities vertical as some of its clients have pulled back spending on projects due to fall in crude oil prices. “The business (energy and utilites) is under pressure but we remain bullish on our near term outlook,” said Jatin Dalal, CFO of Wipro. At the end of Q3, this vertical contributed close to 16 per cent of its overall revenues.
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