Wipro's stock has best day in 16 years amid signs IT consulting has bottomed

By Tomi Kilgore

Fellow India-based IT consultant Infosys' stock surges again, after breaking a string of disappointing earnings reports

Shares of Wipro Ltd. rocketed Friday, after the India-based information-technology consultant beat fiscal third-quarter profit expectations, to snap a streak of earning misses amid a jump in large deals, fueling hopes that a bottom in the IT business has been hit.

"In a seasonally soft quarter, deal booking momentum remained strong," said Wipro Chief Executive Thierry Delaporte. "Our large deals recorded a 20-percent year-to-date growth."

Meanwhile, shares of fellow IT consultant Infosys Ltd. (INFY) (IN:531219) surged again, toward a 13-month high, a day after breaking a streak of disappointing earnings reports.

Wipro's U.S.-listed stock (WIT) (IN:507685) shot up 17% to $6.28, the highest close since May 17, 2022. The stock also posted its biggest one-day gain since it ran up 22.8% on Oct. 28, 2008.

Delaporte said he was "starting to see early signs" of a return to growth in IT consulting, as the Capco business the company acquired in 2021 experienced growth in order bookings in the double-digit percentage range.

Wipro reported early Friday net income that fell to INR27.01 billion ($326 million), or INR5.15 a share, from INR30.65 billion, or INR5.56 a share, in the same period a year ago. That beat the FactSet consensus for earnings per share of INR5.10.

Revenue fell 4.4% to INR222.05 billion, ($2.7 billion), to beat the FactSet consensus of INR221.50 billion.

The company had missed EPS and revenue expectations in the past three quarters, and in six of the past seven quarters.

Infosys' U.S.-listed shares rallied 4.1%, after jumping 4.0% the day before, toward their highest close since Dec. 5, 2022.

The stock had suffered its biggest one-day losses over the past three years on the days that the three previous earnings reports were released. It dove 6.5% on Oct. 12, 2023, sank 8.4% on July 20 and tumbled 9.8% on April 13.

On Thursday, the company reported fiscal third-quarter EPS that slipped to 18 cents from 19 cents, but was above the FactSet consensus of 17 cents. That also snapped a three-quarter streak of bottom-line misses.

Like Wipro, Infosys said results were boosted by "strong" wins in large deals.

Revenue inched up 0.1% to $4.66 billion, but came up shy of expectations of $4.71 billion, according to FactSet.

Wipro's stock has rallied 29.2% over the past three months and Infosys shares have climbed 16%, while the iShares MSCI India ETF INDA has advanced 12.4% and the S&P 500 index SPX has gained 10.5%.

-Tomi Kilgore

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01-14-24 2034ET

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