Wipro Ltd, a prominent player in the IT industry, experienced a surge of 10% in its shares, hitting the upper circuit limit on Monday morning after the release of its Q3 results. The American Depository Receipts (ADRs) of Wipro were notably up by 17% on Friday, setting the stage for this bullish momentum.
Key Highlights of Wipro’s Q3 Performance:
- Discretionary Spending Signals: Wipro emerges as the sole IT major, among the four that have disclosed their December quarter results, showcasing green shoots in discretionary spending. This positive trend positions Wipro uniquely in the competitive landscape.
- Upper Guidance Bound: The revenues’ degrowth in Q3 landed at the upper end of the guided band, marking a significant turnaround compared to the past four quarters. The promising trajectory hints at potential recovery.
- Incrementally Improved Guidance: Wipro’s next quarter’s guidance exhibits incremental improvement after three consecutive quarters of sequentially lower bands. This forward-looking indicator contributes to the growing optimism surrounding Wipro’s performance.
- CAPCO’s Double Digit Booking Growth: Wipro’s consulting business, CAPCO, witnessed double-digit booking growth, presenting a quantitative sign of a rebound in discretionary spending. CAPCO’s exposure to discretionary budgets had impacted Wipro’s recent performance negatively. The positive shift in the environment now positions CAPCO for a potential rebound.
Analysts acknowledge Wipro’s Q3 performance as an inflection point, emphasizing the company’s resilience and ability to adapt to changing market dynamics.
Analyst Perspective and Future Expectations: While the surge in Wipro’s stock is significant, analysts remain cautious and express the need for more evidence before turning entirely positive on the counter. The focus is on observing sustained growth and further indicators of recovery in the coming quarters.
