Wipro Q3 Review - Record Bookings; But Conversion To Revenue A Concern: Nirmal Bang
Guidance for Q4 FY23 revenue growth is flattish to marginally negative in QoQ CC terms while margin is expected to improve QoQ.
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Nirmal Bang Report
Wipro Ltd.’s Q3 FY23 QoQ constant currency IT services revenue growth at 0.6% was lower than our estimate of 1%. Margin expansion of 120 basis points to 16.3% (our estimate 15.2%) came as a positive surprise.
Guidance for Q4 FY23 revenue growth is flattish to marginally negative in QoQ CC terms while margin is expected to improve QoQ.
The revenue growth guidance is weak in the context of total contract value/annual contract value in Q3 FY23 being at the highest levels in its history. Large deal TCV booked in Q3 FY23 stood at $1.1 billion (out of a total TCV of $4.3 billion), with net new indicated to be half of the TCV. With 50% of the TCV linked to the cloud, the deal tenures are longer, in our view.
Wipro management says that cut back in discretionary spend and slow ramp-up of deals won are the reasons for slower growth in Q3 FY23 and likely slower growth in the near future.
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