Cautious on Wipro: Girish Pai, Centrum Broking
Market is going to be disappointed with Wipro numbers
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| Girish Pai, Head Of Research, Centrum Broking, in a chat with ET now talks about Wipro.
What is your call on Wipro?
I do not have the numbers in front of me but what I was expecting was a PAT of close to 1270 crore. So I do not know where the actual numbers are.
There has been a dip of about 2% in profit - profits have gone down by about 2%. Sales have gone up by about 7% for the quarter. So it has been below estimates, margins have contracted a bit and you have seen the guidance for the next quarter come in at about 3.5% to 5.5%.
The profit decline has broadly been in line with what we were expecting. I think the market was expecting a profit increase. So to that extent I would suspect that the market is going to be disappointed with the numbers. But I think my call on the sector has been a cautious one while the numbers for the last quarter and probably for the full FY11 is going to come out fairly strong.
In fact TCS numbers yesterday were significantly stronger than what I was expecting. One should not be extrapolating the strong numbers into FY12 because I think there are whole lot of issues with FY11 numbers and while they are strong, there is an extra spending that corporations are doing to be competetive in this new environment. There are regulatory changes happening in certain sectors like banking and financial services area. There is M&A integration related work that is going on which is going to peter off. There was pent up demand which kind of came in FY11.
So all this that plus the fact that US GDP is going to grow at may be 2.5-2.6% in real terms this year, I suspect that next year it is going to be much weaker as we are expecting a 1-2% kind of real GDP growth and S&P 500 sales
growth not being too strong. In that kind of environment, I suspect that the growth rate that we are seeing this year will not be replicated and our call is fairly contrarian to the market in that respect in the sense that we are saying that growth next year is not going to be as strong as what market is expecting.
What is your call on Wipro?
I do not have the numbers in front of me but what I was expecting was a PAT of close to 1270 crore. So I do not know where the actual numbers are.
There has been a dip of about 2% in profit - profits have gone down by about 2%. Sales have gone up by about 7% for the quarter. So it has been below estimates, margins have contracted a bit and you have seen the guidance for the next quarter come in at about 3.5% to 5.5%.
The profit decline has broadly been in line with what we were expecting. I think the market was expecting a profit increase. So to that extent I would suspect that the market is going to be disappointed with the numbers. But I think my call on the sector has been a cautious one while the numbers for the last quarter and probably for the full FY11 is going to come out fairly strong.
In fact TCS numbers yesterday were significantly stronger than what I was expecting. One should not be extrapolating the strong numbers into FY12 because I think there are whole lot of issues with FY11 numbers and while they are strong, there is an extra spending that corporations are doing to be competetive in this new environment. There are regulatory changes happening in certain sectors like banking and financial services area. There is M&A integration related work that is going on which is going to peter off. There was pent up demand which kind of came in FY11.
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So all this that plus the fact that US GDP is going to grow at may be 2.5-2.6% in real terms this year, I suspect that next year it is going to be much weaker as we are expecting a 1-2% kind of real GDP growth and S&P 500 sales
growth not being too strong. In that kind of environment, I suspect that the growth rate that we are seeing this year will not be replicated and our call is fairly contrarian to the market in that respect in the sense that we are saying that growth next year is not going to be as strong as what market is expecting.
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