Wipro shares plunge 6% after earnings disappoint street
- Although Wipro’s deal wins and pipeline remained healthy, analysts lowered the target price on the stock due to revenue miss.
- As a result shares of the IT firm slipped 6% and was the worst performer on the benchmark index Nifty 50.
- Also, the attrition rate has gone up to 22% in Q3 with Wipro on a hiring spree.
Wipro registered the lowest of all revenue growth of 3% compared to TCS (4.5%) and Infosys (7%) during the October to December period. Analysts had expected a revenue growth of 3.9% during the same period.
The highest addition of large clients and revenue guidance of 2-4% failed to cheer investor’s mood.
Analysts have lowered the share target price and future earnings expectation from Wipro factoring in the revenue miss.
Global brokerage firm Citi has reportedly lowered FY22-FY24 earnings by 1% to factor in the weak earnings growth in the December quarter.
Another brokerage firm JP Morgan has cut FY23/FY24 earnings per share estimate by 2%.
(Target price inputs from CNBC TV-18)
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The rising attrition rate turned into higher employee cost and narrower margins for the company. Not only Wipro, all other technology firms are struggling with the increasing employee cost for quite some time.
But for Wipro, the rate of employees leaving the company has been the highest in the December quarter.
Going forward, the IT giant is planning to hire 30,000 freshers in 2023 as the attrition rate increases to 22% from 20.5% in the last quarter.
Further, the relentless surge of the Omicron variant of Covid-19 has forced Wipro to close its offices globally for the next four weeks.
SEE ALSO: The attrition at Infosys is worse than that at Wipro, Salil Parekh has increased hiring plan by 10,000
TCS vs Infosys vs Wipro Q3 results – here’s how India’s three IT giants stack up against each other
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