Wipro Share Price Surges 13% Post Q3 results

On Monday, Wipro's shares surge 13% reaching a new 52 week high of ₹526.45. This boost came after the company's Q3FY24 earnings report, which exceeded expectations, leading to an 18% surge in its American Depository Receipts (ADRs) to $6.35 the highest in almost 20 months.

Financial Performance

Despite a 12% YoY decline and a 1.2% sequential drop in net profit to ₹2,694 crore for the December quarter. Wipro profit in Q2FY24 was ₹2,667.3 cr and Q3FY23 was at ₹3,065 cr. This marks the fourth consecutive quarter of YoY profit decline, a trend that market experts anticipate may persist. However the company reported a 1.8% QoQ increase in net income to ₹2,690 crore.

Wipro's consolidated revenue from operations decreased 4.4% YoY and 1.4% QoQ amounting to ₹22,205.1 crore. In the same quarter previous year revenue was ₹23,229 cr while in Q2FY24, its revenue was ₹22,515.9 crore. In constant currency terms revenue dropped by 1.7% QoQ and 6.9% YoY. The company anticipates Q4FY24 revenue from its IT services business to range between $2,615 million and $2,669 million with a sequential guidance of -1.5% to +0.5% in constant currency terms.

Total bookings for Q3FY24 reached $3.8 billion in constant currency, showing a slight 0.2% QoQ increase but a 13.5% YoY decline. Large deal bookings stood at $0.9 billion, reflecting an 8.3% YoY decrease. Wipro's CEO, Thierry Delaporte, shared that the company is doing well in securing major deals, which have grown by 20% this year. Additionally their consulting business, specifically Capco is seeing strong growth, as reflected in double digit increases in order bookings.

Market Impact

Following Wipro's surge and positive results from other IT peers like Infosys, TCS, and HCL Tech, Nifty IT index jumped more than 2.5% in intraday trading on Monday. Wipro led the pack with Tech Mahindra advancing over 7% to its 52-week high of ₹1,401.50. HCL Tech also rose 5% to its record high of ₹1,617.65 while TCS and Infosys hit their respective 52 week highs up 2% and 3.2%.

Post-results analyst maintained a 'sell' call on Wipro with a target price of ₹450 implying a 14% downside. Similarly HDFC Securities has a 'reduce' call on Wipro with a target price of ₹450.

Final words

Wipro's performance in a challenging quarter has sparked positive market reactions setting the stage for potential growth in the coming months although analysts remain cautious with their recommendations.