BENGALURU (Reuters) -Shares of Wipro dropped to a three-month low and weighed on other Indian IT companies on Thursday after the country’s fourth-largest IT services provider forecast the slide in IT services revenue would get worse this quarter.
Shares of Wipro, which also posted an unexpected drop in revenue in the July-September quarter, fell as much as 4.3% in their steepest intraday percentage decline since mid-April. The Nifty IT index dropped 0.5%.
While the IT sector has been contending with soft demand for the past few quarters, leading to the likes of Infosys cutting its full-year forecast, analysts believe Wipro’s higher exposure to consulting hurt it more than its peers.
“Given Wipro’s broader presence in the discretionary areas, the conversion is a challenge as enterprises are cautious and are reprioritising expenditures,” Motilal Oswal said in a note.
Wipro said it expects its IT services revenue, which is nearly all of its business, would drop 3.5% to 1.5%, on a constant currency basis, sequentially in the third quarter. That is steeper than the 0.5% sequential drop in the second quarter.
The company’s shares were last down 3.3% at 394 rupees, trimming their year-to-date gain to 0.3%. In comparison, the Nifty IT index has risen nearly 10% so far this year.
($1 = 83.2500 Indian rupees)
(Reporting by Varun Vyas in Bengaluru; Editing by Mrigank Dhaniwala)
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