Wipro shares plunge after Q 3 earnings miss expectations

Wipro shares fell by over 5% in early trade after the IT firm's Q 3 earnings didn't meet market expectations. Wipro's stock touched an intraday low of Rs 653.4, falling 5.49% against the previous close of Rs 691.35 on the BSE. The largest cap share, which was the top Sensex loser, opened at Rs 662.10 with a loss of 4.23%.

Wipro share trades higher than 200 day moving averages but lower than 5 day, 20 day, 50 day and 100 day moving averages.

The IT share has gained 43% in a year and lost 8.28% since the beginning of the year. Total of 7.19 lakh shares of the firm changed hands on the BSE, a turnover of Rs 50.71 crore. The market cap of Wipro fell to 3.59 lakh crore.

Wipro's net profit came at Rs 2,969 crore in Q 3 against Rs 2,968 crore in the same period of the previous year. The net profit was up 1.3 per cent on a sequential basis. The company expects to have revenue from the IT services business in the range of $2,692 million to $2,745 million in the year 2022, resulting in a sequential growth of 2 -- 4 per cent.

Revenue from operations grew 29.6 per cent to Rs 20,313. In the quarter ended December 2020, there were 6 crore from 15,670 crore. Revenue went up 3.2 per cent on a sequential basis.

Motilal Oswal has maintained its neutral call for the Wipro share after Q 3 earnings.

Wipro reported 3 QFY 22 IT Services revenue of $2.64 b 3.0% QoQ CC missing our estimate by 70 bps. The performance of verticals in Q 3 was mixed, with strong QoQ growth in BFS and Consumer, while ENU and Tech were weak.

We reduced our FY 22 - 24 EEPS estimate by 1% to account for the growth front. We maintain our neutral stance as we view the current valuation as fair. Our target price implies 26 x FY 24 EEPS, the financial services firm said.

Piyush Pandey, Lead Analyst- Institutional Equities said, Both revenue and EBIT margin came slightly below expectations. The firm reported revenue of Rs 203.1 billion bn up 3.3% QoQ in INR terms - below expectations IT services revenue grew 2.3% QoQ in dollar terms to $2.64 billion. The revenue growth was led by strong performance in the consumer verticals of BFSI.

The EBIT margin fell 37 bos QoQ to 16.9%, mainly due to higher employee cost of revenue, which grew 4.2% sequentially. We currently have an ADD rating on the stock.