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IT major Wipro is set to announce its financial results for Q2FY25 on October 17. While in Q1, the company saw a sequential revenue decline, analysts predict strong deal wins to reflect in growth recovery, with expected revenue growth. Here are some key considerations:
Revenue growth
A poll of brokerages expects Wipro to report revenue growth of 1.6-2.4 per cent q-o-q , aided by a ramp-up in new deals. Revenue from operations stood at ₹21,964 crore after registering a sequential decline of 1.1 per cent. This quarter, revenue is expected to be between ₹22,316 crore and ₹22,460 crore.
Margins and guidance
Axis Securities reports that Wipro’s operating margins may expand due to lower onsite expenses. While margins had improved a tad, from 16.4 per cent in Q4 to 16.5 per cent in Q1FY25, brokerages expect a decline in earnings before interest and tax (EBIT) margins at 16.2 per cent this quarter.
A BNP Paribas report said, “We expect USD services revenue to grow 0.8 per cent q-q (+0.2 per cent q-q CC), above the mid-point of the guidance, with some benefits from large deal ramp-ups. We model a 26bp q-q contraction in IT services EBIT margin to 16.2 per cent partially on account of the impact of the wage hike. Wipro might guide quarterly CC revenue growth of 0-2 per cent q-q for 3QFY25.”
Motilal Oswal said the company might see a minor decline in margins.
Deals and conversions
In Q1FY25, the total bookings stood at $3.28 billion, marginally lower than the $3.6 billion signed the previous quarter. Large deal bookings stood at $1.15 billion, lower than the fourth quarter’s $1.2 billion with a decline of 3.1 per cent QoQ.
Brokerages have said that among the key monitorables would be total contract value (TCV) and deal pipeline.
“A weak start to FY25 and a poor 2QFY25 outlook might keep Wipro’s revenue growth underperformance elevated relative to its larger peers. We are concerned about the underwhelming track record of the rest of the business, even in an upcycle. The company’s strategy of exiting smaller accounts, while well-intentioned, appears to be mistimed given the macroeconomic pressures, in our view. We see risks to Wipro’s earnings growth and valuation,” said the BNP Paribas report.
Attrition and hiring
Attrition in the last was 14.1 per cent, with the headcount having increased by 337 employees to 2,34,391 employees, making it the first such growth in six quarters. The company said it looks to hire about 10,000-12,000 employees this fiscal.
Other monitorables would include commentaries on Americas 2 growth recovery, Capaco, consulting business performance and outlook, investments in GenAI partnerships and solutions, and updates on core geographies and tail account strategy.
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