Wipro's (WPRO) Q2FY22 IT service revenue growth of 8.1%/28.8% QoQ/YoY in CC was ahead of the top-end of guided range, stated IDBI Capital Equity Research. "Consolidated EBIT margin of 17.8%, -105bps QoQ and EPS of Rs 5.4, -5.6%/23.7% QoQ/YoY. In Q2FY22, WPRO secured 9 large deals of TCV of USD 580 million. For Q2FY22, Management guided IT services revenue growth to be in the range of USD 2,631 million to USD 2,683 million implying a growth of +2% to +4% QoQ is also better than our expectation."

"Wipro has registered healthy growth in revenues on organic basis. The company under new CEO is on the verge of a turnaround. Further, we upgrade our FY23 USD revenue estimate by 4% and prompt us to upgrade our recommendation to BUY with target price of Rs 780/share at a PE of 26x," it added.

Key highlights

Revenue at upper end of Guidance

IT services revenue grew by 8.1%/28.8% QoQ/YoY in CC was better than our forecast. iDEAS BU (61.3% of revenue) outperformed with a 10.5 QoQ growth in CC. Amongst verticals, BSFI (34.8% of revenue) outperformed with 12.5/42.9% QoQ/YoY, led by the Capco acquisition; Consumer (17.3% of revenue) also outperformed with a 7.7%/37.7% QoQ/YoY. Europe (20.2% of revenue) grew by 9.2%/48.3% QoQ/YoY, led by several large deals and the acquisition of capco. USD 75 million+ clients grew by 3 QoQ to 27 and USD 100 million+ clients by 2 QoQ to 13. Consolidated revenue of USD 2,630 million was +6.9%/+28.7% QoQ/YoY. WPRO is confident of achieving double digit revenue growth for FY22 and has guided for 2% to 4% QoQ growth in CC terms for Q3FY22.

Robust organic growth indicate a turnaround

Wipro has grown 4.5% QoQ (on organic basis) over the past two quarters on the back of healthy demand, strategic restructuring and winning multi-year deals. The company is witnessing TCV increase of 19% YoY and ACV increase of 28% YoY. The company has also hired leaders to focus on top accounts and winning large deals. This is expected to turnaround the company and drive revenues going forward.

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