COMMENT. Wipro falls behind peers in key financials

After a couple of quarters of positive surprises, Wipro has once again gone behind peers in its financials for the March quarter. As with peers, currency hurt quite a bit with a weak euro adding to its woes.

The weakness was across the company’s key geographies and verticals. For the company, the mild positives though were slight additions in its large-size clients, improvement in utilisation and traction in its India and West Asia business.

During the period, Wipro’s revenues fell 1.2 per cent sequentially (in dollar terms), while its EBIT(earnings before interest and taxes) rose 1.5 per cent. TCS had a fall of 0.8 per cent in revenues, while for HCL Technologies the figures were unchanged during the March quarter.

Wipro witnessed weakness across key verticals such as telecom, manufacturing, energy & utilities as revenues from these segments fell 1-6.6 per cent during the quarter.

Revenues from Europe fell 5.7 per cent, while the US sales fell marginally. India and West Asia business though continued to do well, growing 10.1 per cent during the quarter. Utilisation was healthy at 80.5 per cent.

Operating margin increased marginally, and continues to hover around the 22 per cent levels.

Wipro managed to add one customer in the $100 million category and another couple of clients in the $20 million bracket.

When it looked like the worst was behind the company, Wipro has once again come with a tepid set of numbers. It has closed FY15 with a 7 per cent revenue growth, a good 5-7 percentage points behind the overall industry’s rate. The guidance for the June period too is just for a 1 per cent sequential growth.

The large-client wins and the fact that the company has had no client losses indicate that it may bounce back, though that may still be a couple of quarters away.

But for the foreseeable future, the discount in the valuation multiple vis-à-vis peers such as TCS, HCL Tech and even Infosys may remain.

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