Wipro Earnings Preview: Shares slip over 2 percent from the day's high ahead of earnings

Wipro's margins will be impacted by the wage hike it implemented during the quarter. The impact of hikes is likely to be offset by aggressive compensation control and an increase in utilisation rates.

The management's comments on margins will be keenly watched as it is hopeful of parameter's improving in the September quarter. The management has also given medium-term margin guidance of 17-17.5 percent. Wipro's margins in the June quarter declined 200 basis points despite no wage hikes.

For the December quarter, the CNBC-TV18 poll expects Wipro to give a guidance of 1-3 percent quarter-on-quarter revenue growth. Broking firm CLSA expects the guidance to range between 2-4 percent while Kotak anticipates it to be between 0-2 percent.

During the June quarter, Wipro's Total Contract Value (TCV) stood at $1.1 billion, higher than the average of $0.6 billion over the last four quarters.  Large deal wins were at the highest in five quarters. However, total deal wins for the first half of the calendar year 2022 are down 27 percent compared to the same period last year.

Nearly a third of Wipro's revenue comes from Europe, and 40 percent of the company's European revenue is driven by its acquisition of Capco. Wipro had acquired Capco in March 2021 for $1.45 billion making it one of the largest end-to-end global consulting, technology and transformation service providers to the banking and financial service industry.

With the current banking sector crisis and fears of recession surrounding the Eurozone, besides Capco, commentary on the performance of Wipro's acquired entities will also be seen as most of the entities are in discretionary spending.

Through September, Wipro has been in the news for its employees and the concept of moonlighting. The company fired 300 employees recently for having engaged in two jobs simultaneously.

Along with Infosys and Tech Mahindra, Wipro has also drawn the ire of freshers for delaying or revoking offer letters. The company also saw a spate of top management exits over the last one to two months with heads of Brazil, Japan, Australia & New Zealand, and the Middle East quitting.

Attrition during the June quarter had eased 50 basis points to 23.3 percent from 23.8 percent.

Variable compensation paid out, noting that variable payouts were cut entirely in mid-to-senior bands

Levers to defend margins in light of increasing cost pressure pricing leverage

Potential share buyback announcement as it plans on returning 45-50 percent of its net income back to shareholders as buybacks

Pipeline of large deals, something that increases in a slowdown