Wipro Q1 Results: Profit Meets Estimates, Sees Tepid Outlook for Q2 Amid Muted Demand

Wipro Ltd. on Friday maintained a modest outlook for the second quarter, as the Bengaluru-based software services provider expects its revenue to either decrease by up to 1% or increase by up to 1% for the second quarter of the ongoing financial year.

Revenue from the IT Services business segment is expected to be in the range of $2.6 billion and $2.65 billion in the July-September period, according to its media statement to the exchanges.

The company does not see a "significant shift" in the demand environment as the clients remain cautious and discretionary spend continues to be muted in the first quarter, its Chief Executive Officer Srini Pallia said in an earnings call post results. "We are now in a better position compared to the start of the first quarter, and are confident that we can sustain our margins within a narrow band with an upward bias."

The company's IT services revenue declined 1% on a sequential basis to Rs 21,964 crore in the April-June quarter. Analysts tracked by Bloomberg had expected the revenue to be Rs 22,237.4 crore.

Net profit of the company rose 6% quarter-on-quarter to Rs 3,037 crore in the quarter ended 30 June 2024. This compares with the Rs 2,931.21-crore consensus estimate of analysts tracked by Bloomberg.

• Ebit increased 1.8% to Rs 3,625 crore (Estimate: Rs 3,543.67 crore).

• Margin expanded 47 basis points to 16.5% (Estimate: 15.94%).

"Over the last 8 quarters we have continuously improved margins. Levers that can be flexed include fixed price productivity, rotation, improving pyramid and rationalization of overheads. To achieve the aspirational level of 17% we will require growth to come back," The company's Chief Financial Officer said Aparna Iyer.

Large deal bookings during the first quarter of the financial year ending March 2025 stood at $1,154 million, a decrease of 3.1% on a sequential basis and a fall of 3.6% on a yearly basis. Total bookings came in at $3.28 billion in the April-June period, lower than the $3.6 billion recorded in the preceding quarter.

The company said that it is seeing momentum in consumer and communications sectors in the Latin America region, adding that BFSI in the United States and Canada has performed well and is expected to return to growth in the region in the medium term.

However, the manufacturing, energy and utilities sector continue to be weak, and Europe and APMEA markets remain soft, according to Pallia.

Separately, Pallia said that the the first quarter witnessed a positive momentum Capco business, recording  a sequential growth of 3.4%.

The company's attrition rate remained relatively unchanged at 14.1% in the three months ended June. Its headcount increased by 337 in the April-June period to 234,391.

Wipro now plans to return back to campuses, with a hiring target of up to 12,000 freshers by March 2025.

"After a break of year, we have started onboarding freshers from campus. We would also be completing all our backlog of offers made in this fiscal and partner with institutes and go off campus for hiring," Wipro's Chief Human Resources Officer said, while mentioning that the company has has already onboarded 3,000 freshers between April and June.

Post the earnings announcement, Wipro’s American depositary receipts dipped over 10% on NYSE, as revenue performance did not meet street expectations.

On Friday, Wipro's shares fell 2.83% to Rs 557 apiece on the NSE even as the benchmark Nifty 50 ended the day 1.09% lower. The quarterly results were declared after market hours.