Wipro reported revenue growth of 5.6%QoQ to USD 1,344mn (upper end of guidance). However, volume growth of 1.5%QoQ was disappointing; offshore pricing improved 3.7%QoQ. Management has guided for 3-5%QoQ growth in Q4FY11. Mr T. K. Kurien replaced joint CEOs.

Strong USD revenue growth; INR revenues sluggish, forex gain supports the bottom-line - INR revenues were flat at Rs78,202mn on the back of a seasonally weak quarter for the products business. Overall EBIT margin dipped 23bpsQoQ to 18.4%. IT Services' margin remained flattish at 22.2%, despite lower utilization and negative impact of currency. Forex gain of Rs91mn and higher other income led to an increase in PAT by 2.6%QoQ to Rs12,849mn. EPS was at Rs5.4.

Europe surprised positively, US and ROW grew moderately; BFSI and emerging verticals outperformed- Europe surged 12.7%QoQ unlike other large Indian IT vendors. US was muted with 2.4%QoQ and RoW grew 4.9%QoQ. BFSI grew 7.1%QoQ which was an impressive performance. Emerging verticals like energy utilities and manufacturing grew 16.1%QoQ and 6.3%QoQ respectively. Telecom grew 5.6%QoQ whereas technology growth still remains a concern.

Uptick in discretionary IT spend; strong new client addition - ADM and consulting surged 9.7%QoQ and 12.9%QoQ led by demand for discretionary IT spend. High traction in Infocrossing led to IMS growth of 6.6%QoQ. 36 new clients were added out of which 15 were in US, 9 in India and ME and 6 in Europe. Top client grew 9.2%QoQ.

Outlook - uptick in non linear services, volume growth to improve, large deal pipeline, stable margins and further efforts for client mining - Non linear services will continue to have a positive impact on realization. Volumes were low due to delay in decision making and are expected to improve. Deal pipeline is strong led by large projects in BFSI vertical. Margins are expected to be stable. The new management has shifted focus towards mining mega accounts for enhanced volumes.

We have introduced FY13E earnings. We maintain `BUY' recommendation on the stock with a target price of Rs513 based on 19x FY13E earnings.