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Wipro: Revenue weakness persists; Macroeconomic uncertainty reflected in weak guidance


Performance: Wipro reported IT services revenue of US$2.59 bn, down 0.8% QoQ/ 1.2% YoY in CC terms. The IT services EBIT margins came at 17.5%, (flat QoQ). FY25 was the second consecutive year of revenue decline (-2.3% YoY CC) due to weakness in Europe (-7.1% YoY CC) and APMEA (-8.9%). Americas 1 grew 3.2% YoY CC. Americas 2 was muted at -0.7% YoY. The EBIT margin for the year stood at 17.1%, (up ~100 bps YoY).
TCV & Deal Momentum: The company won a TCV of US$ 4 bn (up 10.5% YoY in CC terms) with large deal TCV stood at US$ 1.8 bn (up 48.5% YoY in CC terms). Notably, despite strong large deal wins, total bookings were down 4% YoY due to softness in smaller discretionary deals.
Demand & Margins Outlook: The management has guided for IT Services business segment revenue to decline by 3.5% to 1.5% in CC terms in Q1. The management aims to keep margins in the narrow band of current levels
Segmental Trends: Sectors like consumer and manufacturing (Auto and Industrials) saw direct impact from US tariffs and broader macroeconomic uncertainty, while BFSI remained resilient.
Our View: Wipro reported an abysmal quarter on the revenues front, amidst global macroeconomic uncertainty and US tariffs which is causing clients to tread with caution w.r.t transformation projects and discretionary spending. While segments like Capco (+6.5% QoQ and +11.5% YoY) and large deal bookings show growth, regions like Europe and APMEA remain soft, along with weakness in smaller deals. Key monitorable ahead would be Wipro’s ability to improve deal-to-revenue conversion and stabilize its European operations. While Wipro has corrected ~20% YTD, we remain cautious given the lack of near-term positive catalysts for growth and consecutively weak quarterly performance.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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