Despite a tepid guidance for the first quarter of this year, fuelled by multi-million dollar deals in the past few months, Wipro is expected to beat Nasscom’s 13-15 per cent growth estimates for the 2015 fiscal.
Analysts believe that on the back of a strong deal momentum, the company which has been growing at a lower rate than peers like TCS, Cognizant and HCL Tech is expected to bounce back this fiscal year.
In a research note, Espirito Santo Securities said that the strong deal wins in the recent quarters should drive 3-5 per cent quarterly growth guidance for the second quarter of 2015 fiscal. In the last couple of quarters, Wipro has bagged three multi-million dollar deals from companies like Citigroup for $500 million, a $400 million from Takeda Pharmaceuticals and $1.1-billion deal from ATCO.
In 2013-14, Wipro’s revenues grew 16 per cent over the previous fiscal at ₹43,755 crore, while net profit rose 17.5 per cent to ₹7,797 crore. However, this lags behind peers like TCS, which posted a 29.9 per cent growth, followed by Cognizant, which posted a 17 per cent growth in the last fiscal.
Wipro is expected to announce its first quarter results on July 24 and is in the silent period. However, in the last quarter, CEO TK Kurien had told Business Line that the way Wipro is exiting the 2014 fiscal and coupled with its strong deal pipeline, points to growth ahead.
This momentum also indicates that the turnaround strategy pursued by Kurien is on track.
Others agree. “Initiatives taken to improve internal process and an increased focus on automation, instead of depending on people additions have been successful,” said AK Prabhakar, an IT analyst.
Espirito Santo Securities also believed that win rates for large deals have improved by 50 per cent over the past two years and this is visible in higher large deal wins and improving revenues growth.
Further, these deal wins come in geographies such as US and Europe, which contributed about 79 per cent of Wipro’s overall revenues in the last fiscal year.
Sanchit Vir Gogia of Greyhound Research believes that large contracts helps Wipro get access to more high-profile deals at a time when outsourcing demand looks stronger when compared to previous years.