Wipro Q1 earnings: Can Wipro sustain its momentum despite global business uncertainties?

ET Intelligence Group: Wipro‘s June quarter performance was better than the muted expectations of analysts. The company continued to report traction in new deals helped by the sustained business momentum in the recently acquired entities. While the management stated that uncertainty in the global business environment persisted, it also highlighted that the new deal wins consisted of some of the contracts that resulted from vendor consolidation, reflecting its competitive offerings. In addition, though clients continue to focus on short-term deals, discretionary spend is taking shape in certain gamuts including artificial intelligence and data analytics.

Wipro reported deal wins with a total contract value (TCV) of nearly $5 billion for the June quarter compared with TCV of around $4 billion in the previous quarter. It identifies deals with a total order value of $ 30 million or above as large deals. It bagged $2.7 billion worth of such large deals compared with $1.8 billion in the quarter ago. The revenue trajectory in the coming quarters will depend upon the pace of execution of these deals, which has slowed down in recent times as clients are taking time to assess the geopolitical developments.

The company expects dollar denominated revenue to either fall sequentially by upto 1% or grow by upto 1% for the September quarter in constant currency (CC) terms that is keeping aside the effect of currency fluctuations during the period. While the guidance appears to be cautious, it is more optimistic that the guidance of either upto 3.5% fall or a rise of upto 1% that the company had issued for the June quarter. This reflects a marginal moderation in the company’s assessment of the impact of global uncertainties. This is similar to the larger peers including Tata Consulting Services (TCS) and HCL Technologies. The latter tightened its full year revenue guidance band to 3-5% growth from earlier expectation of 2-5% growth for FY26.

Wipro’s revenue fell by 0.4% sequentially to $2,587.4 million compared with the average estimate of 0.8% decline. In rupee terms, it dropped by 1.6% to ₹22,134.6 crore while net profit slipped by 6.7% to ₹3,330.4 crore.

Like peers, Wipro is yet to decide upon salary revision for the staff amid execution delays. Its employee pool fell by 114 sequentially to 233,232 in the June quarter.

Attrition rate inched up by 10 basis points to 15.1% but increased significantly from 14.1% a year ago.Wipro’s stock has gained by 5% compared with around 3% gain in the sector indices. The stock is expected to remain range bound until a clear growth trend emerges.