Wipro Q1 FY25 results: Net profit rises 5.2% to Rs 3,036.6 crore

IT services segment revenue was at $2,625.9 million, a decrease of 1.2 per cent Q-o-Q and a decrease of 5.5 per cent Y-o-Y

Bengaluru-based IT services major Wipro posted a net profit of Rs 3,036.6 crore for the first quarter of the current financial year (FY25), up 5.2 per cent from the year-ago period. Profit was up 6.2 per cent quarter-on-quarter (Q-o-Q) and beat Bloomberg estimates of Rs 2,931 crore.

Like its larger peers, India’s fourth largest IT services firm also signalled better client spending as it marginally upped its revenue guidance for the second quarter of FY25 from -1 per cent to +1 per cent. The company had cut its revenue guidance in the last quarter and guided for revenue in the range of -1.5 per cent to 0.5 per cent.

 

Revenue for the March quarter was down 3.79 per cent from the year-ago period to Rs 21,963.8 crore. This was below Bloomberg estimates that pegged the revenue at Rs 22,237.4 crore. On a sequential basis, revenue growth was down 1.1 per cent as pressure continued on discretionary spending.

IT services segment revenue was at $2,625.9 million, a decrease of 1.2 per cent Q-o-Q and a 5.5 per cent decline Y-o-Y. The company announced total booking at $3.2 billion. Large deal bookings were at $1.1 billion, a decrease of 3.1 per cent Q-o-Q and 3.6 per cent Y-o-Y.

Wipro ADR fell by 9.3 percent in opening trade as numbers remain majorly inline while stock has jumped during near past sessions. 

Srini Pallia, Managing Director and CEO, said: “In Q1, we did not see any significant shift in the demand environment. Clients remain cautious and discretionary spending continued to be muted. But as we move into the second quarter, we believe we are now in a better position compared to the start of quarter one.”

IT services operating margin for the quarter was at 16.5 per cent, an increase of 0.1 per cent Q-o-Q and 0.4 per cent Y-o-Y.

India’s top four IT services firms have started the financial year on a positive note with strong performances. 

Biswajit Maity, Sr Principal Analyst, Gartner said: “Overall, Q1 presented mixed results, with some vendors experiencing strong growth momentum and others showing muted growth. We've consistently emphasised that this year will show growth. In 2024, buyers of IT services will maintain caution regarding discretionary spending and prioritise achieving strong business results. Enterprises will proceed cautiously with new project commitments in the first half of 2024, anticipating accelerated spending in the latter part of the year.”

Growth across geographies and verticals was either subdued or declined for Wipro. Americas 1 grew 1.3 per cent Y-o-Y and 0.3 per cent sequentially. Americas 2 was down 3 per cent Y-o-Y and 0.9 per cent sequentially. Europe was down 11.6 per cent Y-o-Y and 1.9 per cent Q-o-Q. Asia Pacific Middle East Africa (APMEA) was also down by 13.2 per cent Y-o-Y.

Among verticals, BFSI saw a 5.3 per cent decline Y-o-Y but grew marginally at 0.3 per cent sequentially. Energy, natural resources and utilities plunged 12 per cent Y-o-Y and 6.5 per cent Q-o-Q. Manufacturing slumped -15.7 per cent Y-o-Y and 3.4 per cent Q-o-Q. Communication was the worst performer with a decline of 21.9 per cent Y-o-Y and 2 per cent Q-o-Q.

Acknowledging the pressure in verticals like manufacturing and communications, Pallia said Wipro’s ability to mine larger clients was getting better.

“Our top 25 clients continue to outperform, growing 1.3 per cent sequentially, and it gives us comfort that the strategy is working,” said Aparna Iyer, chief financial officer, Wipro.

“2024 is the year of GenAI planning — enterprises are working out how to use GenAI, and tech providers are building out the tools and platforms to allow those plans to come to fruition in 2025. The adoption of GenAI/AI will also influence the growth momentum of the IT sector,” added Maity.

The company also improved its margins for the quarter.

“We continued to expand our margins to 16.5 per cent in Q1’25, this is a 42 bps improvement Y-o-Y. Our margin performance is also reflected in our EPS increase of 10% Y-o-Y,” said Iyer.

The company, like its larger peers, also added 3,000 freshers during the quarter. It also said that it will complete the onboarding of all the freshers who have been waiting for over a year. The company will also hire 10,000-12,000 freshers during the current financial year (FY25). Voluntary attrition was at 14.1 per cent on a trailing 12-month basis. Utilisation at the company was at a high of 87.7 per cent.