Q1 profit up but revenue declines; CEO optimistic about future growth and large deals
While its profit increased by 4.6 percent from a year ago to ₹3,003 crore in the first quarter of FY25, IT major Wipro reported a 3.8 per cent year-on-year (YoY) revenue decline.
Revenue from operations stood at ₹21,964 crore, registering a sequential decline of 1.1 per cent from last quarter’s ₹22,208 crore. The degrowth was mostly in line with analyst forecasts. Further, Wipro revised its earlier guidance of -1.5 to 0.5 per cent for the second quarter of FY25 to -1 per cent to +1 per cent.
While Wipro declared its numbers after markets closed, earlier in the day the company’s shares were down by 2.78 per cent and closed at ₹557.25. Wipro, which is listed on NYSE, saw its ADR crashing 10.3 per cent at $6.18 at the time of going to press.
However, CEO & MD of the company Srini Pallia, in his post-results commentary, sounded upbeat and said: “Deal pipeline is robust and secular across four markets, and the seven industries we operate in. Some deals are industry solutions, which can be replicated. The guidance for the quarter is -1 per cent to 1 per cent CC.” .
““We recorded another quarter of total large deal bookings over $1 billion, with our largest win in the recent years. Our top accounts continued to grow, accompanied by a growth in Americas1 SMU, BFSI and Consumer sectors. We are pleased with the momentum across industries and sectors and are confident in our ability to execute better on bookings and profitable growth as we transition to Q2. While we continue to build on our ai360 strategy and preparing our workforce for an AI-first future,” he added.
Wipro’s CFO Aparna Iyer said: “On E&U (energy & utilities) and manufacturing, we continue to experience some softness, because of the loss of large programmes and not winning enough new programmes. We have a good pipeline in manufacturing and this needs to be converted. In communication, we announced a large deal.”
The company highlighted the ‘green shoots’ it saw in the BFSI, consumer, and healthcare verticals. However, it continues to witness softness in manufacturing, and E&U. Despite the $500-million telecommunications deal that Wipro scored earlier this quarter, the communications sector remains its smallest vertical in terms of revenue share.
“On Capco, we are seeing better momentum in BFSI, and energy, with secular growth and bounce back in terms of service lines, and sectors they operate in. In Q1, we also maintained positive momentum in Capco business achieving a sequential growth of 3.4 per cent,” she added, talking about Wipro’s consulting business.
The total bookings stood at $3.28 billion, marginally lower than $3.6 billion signed last quarter. Large deal bookings stood at $1.15 billion, lower than the previous quarter’s $1.2 billion with a decline of 3.1 per cent QoQ. Margins have improved a tad, from 16.4 per cent in Q4 to 16.5 per cent in Q1FY25.
Headcount down
Attrition this quarter remained mostly flat with a slight uptick at 14.1 per cent. Headcount in Q1 of FY25 increased by 337 employees to 2,34,391 employees the first such growth in 6 quarters. Overall, 15,367 have departed from the company in the last 12 months. The company said it looks to hire about 10,000 - 12,000 employees this fiscal.
Biswajit Maity, Sr Principal Analyst at Gartner, said, “Despite a slight decline from the previous year, the company has maintained a strong pipeline of business opportunities, indicating a promising future. Although the IT sector is currently impacted by cautious buyer behavior, the anticipated increase in global IT spending in the coming quarters suggests a positive long-term outlook.”
(With additional inputs from Aishwarya Kumar)