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Wipro Share Price | HCL Share Price: HCL Tech managed to beat Street expectations; Wipro result on neutral side: Omkar Tanksale

“On the execution part, has lagged as compared to but I believe there is still expansion of 30 bps and it is also much in line with expectations,” says Omkar Tanksale, Equity Research Analyst, Axis Securities.

How are you reading the numbers?
I believe HCL has outperformed the Street’s expectations on all fronts – for the revenue in rupee terms, in constant currency basis and also the margin expansion. The margins stood at 18% indicating an upside of 93 basis points, we were expecting around 63 basis points of margin improvement. The deal wins have also come strong at $2.4 billion for this quarter and indication of 16% QoQ on the higher side.

The overall revenue guidance has also increased from 12% to 13.5-14.5%, whereas services guidance has also improved and stands at 16% to 17% which also shows the management confidence in the services pipelines that they have. They have also improved on year ending business which is more than 5% and also on the product and platform business. The good news is year ending services and the IT services both have improved more than 5% for the quarter which is a good result according to me.

What about Wipro numbers? Are they looking a bit of a miss?
The revenue was in line with the expectations of 4% and the growth momentum continues. On the execution part, the company has lagged as compared to TCS but I believe the expansion is still there of 30 bps and I believe it is also much in line with the expectations.

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The outlook going ahead is one should look upon because it is a seasonally weak quarter Q3 and the outlook as given is 0.5 to 2% which might be an indication of the uncertainty and also on furloughs one should take into consideration as well. So according to me, the results are much in line with expectations.

Since you are saying that the numbers are not very disappointing, should we not expect any sort of downgrades tomorrow? Are you also expecting a flattish move for the stock tomorrow?
Since the company has not executed exceptionally well, maybe there is a restriction in the upside potential going forward but I believe the company has performed well. It holds the resistance level on an operational level and it holds parameters and uncertainties particularly in the areas of the holding of the attrition level, managing the operating cost and transportation cost and also growth in line with expectations of the Street and also with the bookings coming up.

One should see how execution level is going up after the management concall and how they are planning to ramp up the deals and engagement with the clients and on the basis of that, we can project the revenue or the growth momentum that is going to be there.

I believe the company moves on a larger front. It has neither performed well nor has it performed bad, it is on the neutral side.

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