Wipro shares rose over 13 per cent in early trading on Monday, reaching a 52-week high of Rs 529, despite the company reporting weaker-than-expected results for the third quarter.
The primary reason for the rise in Wipro's shares can be attributed to a 17 per cent surge in its American Depository Receipts (ADRs).
Wipro's Q3 performance is seen as a turning point, with revenues experiencing degrowth within the upper end of the guided range. Analysts note this as a significant shift after three consecutive quarters of sequentially lower bands.
The company's revenue from its IT business declined by 1 per cent, amounting to Rs 22,151 crore. Additionally, the EBIT (earnings before interest and taxes) margin for its IT business was reported at 16 per cent, slightly lower than the margin of 16.1 per cent recorded in the previous quarter.
The positive sentiment is further fueled by the impressive performance of CAPCO, Wipro's consulting business, which recorded double-digit booking growth. This is considered a quantitative sign of a potential rebound in discretionary spending, a critical aspect influencing Wipro's recent performance.
Wipro's strategic focus on driving growth through its partner ecosystem and addressing operational enhancements is gaining attention. The company's trajectory is perceived as recovering after a 6 per cent drop in the quarterly revenue rate over the past three quarters.
While the commentary on the consulting business is positive, Wipro still faces challenges such as deal market-share losses to peers and a decline within verticals. Despite these challenges, Wipro's Q3 performance, surpassing street expectations, led to an upswing in its stock.
As of 11:04 am, shares of Wipro were trading at Rs 495.70, 6.50 per cent higher than the previous close.
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