Now Wipro says recent Chennai deluge to hurt its Q3 revenue prospects

The recent Chennai deluge has forced one more frontline IT company to issue a warning on its revenue expectations in the third quarter earnings beginning next month. The Bangalore-headquartered Wipro today said the unprecedented rains that created havoc across the Chennai city in last few weeks is likely to have a a material impact on its third-quarter (October-December) earnings.

“The Chennai rains have impacted business at our Chennai facilities,” the company said. “We see an impact on Q3 revenues.”

“The recent heavy rainfall and resultant flooding impacted the regular business operations of Wipro’s Chennai facilities during the first week of December… The incident is expected to have a material impact on the revenues and will result in higher one-time cost incurred towards deployment of our business continuity plan. Both these factors will impact our operating margins for the quarter,” Wipro said in a statement.

The company said it expects its third quarter revenues to be in the lower half of the guidance range. The company had forecast Q3 revenues for IT services to be in the range of $1,841-1,878 million, Moneycontrol reported.

The weak third quarter earnings forecast may hurt the market sentiment further, as the sector has been amongst the worst performers on the bourses in last month amid volatile currency and subdued IT spend across the developed markets.

Recently, TCS had issued a similar warning following the Chennai floods, saying the recent downpour had taken a toll on the company’s operations in the city.

“The market may take this negatively,” Mayuresh Joshi of Angel Broking told CNBC-TV18. “I see underperformance for the Wipro stock to continue for 1-2 quarters.”

Among IT companies, Joshi said he was positive on TCS over the long term. “I expect its dollar revenue growth would be reasonable for the next two years. It has undertaken a lot of data analysis activities with clients and it should show up.”

Wipro stock price On December 16, 2015, at 10:12 hrs Wipro was quoting at Rs 554.55, down Rs 4.05, or 0.73 percent. The 52-week high of the share was Rs 676.90 and the 52-week low was Rs 512.55.

The company’s trailing 12-month (TTM) EPS was at Rs 33.45 per share as per the quarter ended September 2015. The stock’s price-to-earnings (P/E) ratio was 16.58. The latest book value of the company is Rs 140.16 per share. At current value, the price-to-book value of the company is 3.96.

With inputs from agencies