By July 24, 2012 Read More →

Janney/WIT: 1Q13 First Take-Results in Line, Guidance Light | Market Analysis

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Our Thoughts: Wipro reported quarterly results roughly in line with guidance. Volume growth of 0.8% was below peers with pricing down 1.7%, roughly in line with peers. Wipro guided to -1% to +1% sequential growth in the September quarter. We look to the conference call for more information on the demand environment (areas of strengths and weaknesses), color on the guidance provided for September, and the progress toward restructuring of the business. We maintain our NEUTRAL rating.

1Q13 results roughly in line. Billed (non-GAAP) IT Services revenue came in at $1,514.8 million, a 1.4% sequential decrease and 7.6% year over year increase vs. our estimate of $1,542.4 million and guidance of $1,520.0-$1,550.0 million. Constant currency billed IT services revenue was $1,540.0 million, +0.3% growth, in line with guidance. IT services operating margin was 21.0%, up 30 bps sequentially. EPS on a consolidated basis came in at $0.12, below our estimate of $0.13 but in line with consensus.

Investor focus. Wipro’s volume growth was +0.8% vs. +2.7% for Infosys and +5.3% for TCS. Consolidated pricing for Wipro was down -1.7% (-0.9% onsite and -2.0% offshore), vs. -3.7% for Infosys and -1.1% for TCS. Europe, an area of concern for investors, grew 0.3% for Wipro (vs. -8.4% for Infosys and +9.6% for TCS). The U.S. decreased -2.2% for Wipro (vs. +1.6% for Infosys and +3.2% for TCS). Financial services decreased -2.0% for Wipro (vs. -1.1% for Infosys and +5.5% for TCS). ADM decreased -6.3% for Wipro (vs. -0.5% for Infosys and +0.7% for TCS).

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Joseph D. Foresi

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