Wipro Q3 Results Preview: Revenue may drop for fourth quarter in a row, margin may be hit

In case Wipro's revenue in constant currency terms declines in the December quarter, it will be the fourth straight quarter of decline in revenue for the company.

For Wipro, its key businesses of BFSI and Hitech can continue to remain under pressure.

For the quarter, Wipro's margin may be hit due to wage hikes that took effect from December 1.

Analysts expect Wipro to issue a constant currency growth guidance of -1% to 1% for the March quarter.

Deal wins are likely to remain muted during the quarter given that the company did not make any significant deal announcements during the quarter.

A key aspect that the street would like to hear from the management is whether cancellations of discretionary programs are reducing.

Wipro's major overhang has been the consistent senior leadership attrition. Recently, Wipro's Chief Growth Offer Stephanie Trautman accouned her decision to step down for personal and professional goals outside of Wipro. Newspaper reports also indicated that Azim Premji is displeased with the state of affairs at the company.

Another important factor to hear management commentary from would be whether the company has levers to meet its margin aspiration of 17%.

In a note on December 12 last year, Kotak Institutional Equities said that demand continues to remain uncertain with pressure on discretionary spends. The brokerage wrote the note after an interaction with CFO Aparna Iyer.

The brokerage also said that rampdowns are decelerating and that furloughs will be quite intense. The CFO also told the brokerage that momentum can start building up in the March quarter of financial year 2024 and the June quarter of financial year 2025.

On the flip side, brokerage firm Motilal Oswal said that Wipro should be among the early names to benefit from the demand revival.

With consulting exposure contributing to nearly 15% of overall revenue, this can act as a upside surprise for the stock which has low expectations and a large valuation gap versus peers.

Although the brokerage said that the near-term performance for Wipro will remain weak.

Wipro's shares have outperformed the Nifty IT over the last 12 months, rising 40% compared to the 23% jump seen in the IT index.

At 19 times, valuations remain cheaper compared to peers.