Shares of Infosys Ltd and Wipro Ltd are under scrutiny on Friday morning, as their American Depositary Receipts (ADRs) fell 4-6 percent overnight in US trade, despite Infosys reporting better-than-expected Q3 earnings and raising its yearly sales guidance.
Infosys Ltd ADR shares fell 5.77 percent to $21.57 per. Wipro Ltd ADR shares decreased 4.07 percent to $3.30 each. Wipro is set to report its quarterly profits today.
Infosys posted better-than-expected Q3FY25 results, above Streets forecasts and displaying sustained resilience in a mixed demand environment.
"Revenue growth was 0.9%/1.7% QoQ in USD/CC terms, compared to our forecasts of -0.3%/0.6% in USD/CC terms, and margins were 21.3% versus our projections of 20.5%. This beat was driven by higher pass-through revenue and inorganic contributions from the In-tech acquisition," according to Nirmal Bang Institutional Equities.
The brokerage stated that the increase in discretionary projects in BFSI and minor contract wins will result in faster revenue conversion. However, lackluster major deal wins combined with the absence of mega contract wins casts doubt on double-digit growth in FY26. Despite the upward revision of expectations, the ask rate for Q4 remains relatively low at - 0.8%, it said.
In the instance of Wipro, the IT business is projected to record a double-digit profit increase in the December quarter despite flat revenues. It is likely to provide a better picture for Q4, with favorable topline growth as a result of improved deal pipeline and close activity.
Nuvama expects a net profit of Rs 2,967.80 crore, up 10.2 percent. "We predict IT Services revenue to fall 0.6% QoQ in CC and 1.3% QoQ in dollar terms. Margins are likely to fall by 50 basis points QoQ due to the two-month impact of the wage raise. "We expect Wipro to provide revenue growth guidance of -1 to +1 percent CC QoQ for Q4FY25E," the firm said.
Nuvama stated that it will check for an update on Capco's business and deal execution.
Prabhudas Lilladher expects a profit of Rs 3,040 crore, up 12%. It expects sales to dip 0.7% YoY at Rs 22,040 crore. The margin is expected to be 16.1 percent, up from 14.8 percent year on year.
"We expect Wipro's sales to fall by 1% QoQ in CC and 2.1% QoQ in USD terms (currency headwind of 110 bps). Furloughs in Capco, manufacturing weaknesses, and client-specific challenges in ENU will all have an influence on the company's third-quarter results. We expect EBIT margin to fall by 50 basis points QoQ due to a two-month wage raise impact and sluggish topline growth," it said.
