- Company is expecting robust growth from the BFSI and consumer vertical and hi-tech. It expects growth to bounce back in the healthcare vertical.
- Management expects some margin pressure in the near term with need for higher subcontracting costs and due to big deals coming for lower margins.
- Management expects to migrate to a hybrid work model but has not yet decided on a clear vision yet.
Mumbai: The management of Wipro spoke at the Asia Tech Conference organised by Credit Suisse. The company sees good growth potential from both, the Banking, Financial Services and Insurance space and the Consumer space. The management believes that while BFSI has demonstrated robust demand there is a strong pipeline given the increased digitisation needs going ahead.
The management also says that BFSI players need to compete with fintech and hence, demand will sustain. Additionally, the Hi-tech vertical is doing reasonably well as well. The management is also expecting a rebound in growth in Healthcare. The management says that they have made progress with deals in the US and Europe.
As regards margins and costs, the management expects margin pressure in the near term. The company says that big deals come at lower margins initially and then, over the life of the contract, these margins will even out to the current rates for the company.
The company expects to see subcontracting costs going up from here to help the company address higher demand. While these two factors may impact costs and margins, the management says that it will be hiking prices and hiring freshers to offset this trend. The freshers may take a quarter or two to stabilise, but eventually, margins will improve.
On the operational side, the management has not yet decided on a clear vision on how the hybrid work model will work, but is clear that some proportion of the workforce will work from home.
The stock has given solid returns and has gained over 13% in the last month and almost 75% year to date. Credit Suisse continues to maintain a ‘Neutral’ rating with a price target at Rs 575 a share, the stock gained 5% yesterday and closed over a percent lower at around the 675 mark today.