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

ICICIdirect Research 17 Apr 2025 DISCLAIMER

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.

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