Key highlights from Wipro Ltd (WIPRO) Q4 FY22 Earnings Concall
Management Update:
- WIPRO said that through the year, the company added over 45,000 new employees on a net basis, which was the highest ever for WIPRO.
- The company stated that for FY23, WIPRO expects to grow in double digits and margins for the medium term is expected to hold in the 17-17.5% band. However, for the next 2-3 quarters, WIPRO expects to see slightly lower margins.
Q&A Highlights:
- Kumar Rakesh from BNP Paribas asked about the operations of Rizing acquisition. Rajan Kohli MP said that Rizing business will operate under the Application and Data business, adjacent to the SAP business. The idea is to drive synergies between Rizing and Wipro’s existing SAP business and go to market. WIPRO will continue to serve existing clients of Rizing and look for cross-sell opportunities.
- Kumar Rakesh from BNP Paribas also enquired about the growth outlook of 1-3% and how WIPRO is seeing growth panning out throughout the year. Thierry Delaporte CEO replied that the reality is that it continues to be a solid growth for 7 quarters now. And 1-3% is the level where WIPRO feels it is comfortable for Q1. The pipeline is solid.
- Ravi Menon from Macquarie asked about the nature of WIPRO’s guidance and seasonality. Thierry Delaporte CEO answered that looking at seasonality Q after Q, the sequence show growth of 5 or 6 of the competitors and WIPRO. And WIPRO have been one of companies to be consistently above 3% every quarter. It added that it’s still talking about growth and has the same level of confidence it had several quarters ago.
- Ravi Menon from Macquarie asked about the rough proportion of revenue that engineering services contributes. Thierry Delaporte CEO said that engineering services is a significant practice for WIPRO and it has gained real scale. It is a little over 10% of WIPRO’s revenues.
- Gaurav Rateria of Morgan Stanley asked how the company is managing supply challenges in the near term. Jatin Dalal CFO replied that the growth is absolutely front and center to WIPRO’s strategy and to its execution as it looks at FY23.
- Pankaj Kapoor from CLSA queried about the outlook for the Capco business, given the current macro headwinds in Europe. Thierry Delaporte CEO answered that outlook continues to be really solid. Pipeline is strong. Looking at the bookings for 4Q, it’s been the biggest ever they’ve done. So it’s really looking good for Capco.
- Pankaj Kapoor from CLSA asked about the order book and quantitative or qualitative commentary in terms of how that has grown on a TCV way. Thierry Delaporte CEO answered that on the quality of order book, about 40% of WIPRO’s order book today is coming from cloud. And it’s good because this market continues to expand. And also, about 50% of the deals WIPRO closed in 4Q have been in partnership with some of its larger partners.
- Pankaj Kapoor with CLSA also asked that give the investment and wage pressures in 1H23, if margins would be at risk overall in FY23. Jatin Dalal CFO replied that it’s difficult to look at future. However, added that WIPRO will be slightly lower than the margin corridor discussed earlier for next two, three quarters.
- Dipesh Mehta of Emkay Global clarified if the double digit revenue growth guidance is organic or acquisition closed so far. Thierry Delaporte CEO clarified that the guidance for growth is organic and is based on the perimeter as of today, the acquisitions that are closed.