As Wipro looks set to report its second quarter numbers, investors are expecting a better third quarter guidance and sustained growth in areas such as infrastructure management.
India’s third largest software exporter, which had estimated a 2-4 per cent quarterly revenue growth in US dollars, had disappointed many analysts recently. “For us, we are watching the third quarter guidance, which can indicate that they are on a better growth trajectory,” said Ravi Menon, an analyst at Centrum Broking.
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“The only worry would be around cross currency headwinds which can impact the company by 60-80 basis points or 0.6-0.8 per cent,” said Hitesh Shah, analyst with IDFC Securities. IT companies bill their revenues in currencies such as the dollar and the pound. Business areas such as IT infrastructure management are expected to show strong growth. In the previous quarter, the segment grew 5 per cent, fastest among all service lines of Wipro, but similar to competitors such as Tata Consultancy Services and HCL Technologies.
Also, analysts are keeping a close eye on how the company ‘mines’ its existing clients and at the same time goes after new projects. “While the ‘hunting’ team has done reasonably well with large-sized deals, it has taken longer than expected in terms of ‘mining’ existing clients, as its offerings had to be re-aligned,” said Shah.
According to AK Prabhakar, an independent IT analyst, sustained growth recovery would require both hunting and mining to deliver simultaneously. The street will also look at the management commentary on how Wipro arrests attrition, which stood at 17 per cent in the first quarter, something that rival Infosys is grappling with over the past several quarters.