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Margin expands above our expectation… Wipro reported a heathy set of Q3FY21 numbers that were above our estimates on all fronts. Revenue growth took place across verticals. The IT service EBIT margin increased 234 bps QoQ to 21.7% vs. our estimate of 19.5%, mainly led by higher offshoring. Key highlights of the quarter was 1) the company has won 12 deals with > US$30 million (mn) TCV and TCV booked of these deals was over US$1.2 billion (bn), 2) Wipro has declared dividend of | 1/share, 3) Its offshore percentage increased 230 bps to 52.7%. Wipro guided that its Q4FY21E IT services revenues would be in the range of US$2,102-2,143 mn, which translates to 1.5-3.5% QoQ growth. Restructuring of business, large deals to drive growth We believe Wipro possesses all the key ingredients of robust growth in the long run. The company has strong full services capabilities across applications, infra, BPS and engineering, which should help it as integrated deals gain prominence. Further, the induction of a new CEO with focus on profitable growth make us positive on its future growth. This, coupled with the new CEO’s focus on simplification of organisation, improving client mining, focus on fewer verticals and geographies to drive growth are expected to bode well for future growth.
