A change that is not too often, Wipro will be the first IT giant to declare the results for the fourth quarter of financial year 2019/20, which is scheduled for tomorrow. Breaking its tradition of holding a press conference at the company's headquarters in Sarjapuru, Bangalore, the company's senior management will be announcing the results through a video conference, owing to the lockdown due to COVID-19 pandemic. Here is What to watch out from Wipro's management commentary:
1) COVID-19 impact and contingency plans:
Wipro, like most companies announced work from home starting mid-March, just two weeks before the closure of the fourth quarter. As of the first week of April, the company said that close to 95 per cent of their customers had approved work from home with 90 per cent of the employees globally enabled to it. However, with UK, Europe, US and Middle East witnessing escalation of the pandemic, the company's commentary around updates from their clients on permission to continue WFH, risks around service-level agreement violations and penalties and also the contingency of client bankruptcies will be noteworthy.
2) Guidance for Q1FY21:
Wipro during the Q3 results guided the company's Q4 revenue growth to be in the range of $2,095-2,137 million or a sequential growth of 0-2 per cent. Analysts, however, expect the company's revenue to hover around the lower end of the guidance band. Foreign brokerage Nomura expects Wipro to guide for a 2-4 per cent revenue fall in Q1 of FY21 due to impact from WFH constraints in the BPO business and higher exposure to the energy sector.
3) Update on CEO search
Earlier this year, Wipro announced the resignation of its CEO Abidali Neemuchwala with him continue to serve until the appointment of the next CEO to ensure a smooth transition and business continuity. The company also clarified that it was looking at external candidates to fill the position, putting to rest speculation of internal elevations. An update on the CEO search or an announcement of a new CEO could provide some clarity to investors on the management's direction while maneuvering COVID crisis.
4) Commentary on BFSI, energy and health business
These three business units make up for over 60 per cent of the company's revenues. In Q3 earnings call, CEO Abidali had said that the company was receiving large components of big deals, especially in digital where the deal sizes were getting bigger compared to CY19 .The company also said that it was seeing robust deal traction in the healthcare business outside of HealthPlan Services and even in the energy business, a lot of investments were happening in digital and cloud space. However, with the times having changed drastically over the last two months, outlook on BFSI and healthcare business would signal early trends shaping up.