Wipro Q2FY25 preview: Revenue may fall up to 3% YoY; margin, guidance eyed

Overall, the sentiment remains cautiously optimistic for Wipro ahead of results, with key focus areas including large-deal pipelines and consulting growth.

Wipro Q2FY25 preview: Information technology (IT) major Wipro will announce its September quarter of financial year 2025 (Q2FY25) earnings on Thursday, October 17, 2024. 

Wipro's Q2FY25 estimates reflect mixed expectations within the IT sector, according to multiple brokerages. HSBC anticipates flat revenue in $ terms, citing headwinds in manufacturing and energy & utilities, while projecting a 50 bps improvement in Ebit margin. Nuvama predicts flat constant currency revenue growth with a slight increase in USD, forecasting a potential decline in Q3 guidance. Kotak Institutional Equities expects marginal constant currency growth, balanced by weak performance in specific sectors, yet highlights the importance of the new CEO’s strategic initiatives.

 

Overall, the sentiment remains cautiously optimistic ahead of results, with key focus areas including large-deal pipelines and consulting growth.

Q2FY24 highlights
 

Wipro posted a gross revenue of Rs 22,520 crore in Q2FY24 (down 0.1 per cent Y-o-Y), IT services segment revenue at $2,713.3 million (down 2.3 per cent Q-o-Q), IT services segment Ebit at Rs 3,610 crore (up 6 per cent Y-o-Y), IT services operating margin at 16.1 per cent (up 10 bps Q-o-Q and 100 bps Y-o-Y), and net income (profit) at R 2,650 crore (down 0.5 per cent Y-o-Y).

Wipro bonus shares
 

That apart, Wipro on Sunday (October 13) said its board of directors will consider the issue of bonus shares at a meeting scheduled to be held on October 16-17, 2024.

"The board of directors of the company will be considering a proposal for the issue of bonus shares, in accordance with the applicable provisions of the Companies Act, 2013 (including the rules and regulations framed thereunder), the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, at its meeting scheduled to be held over October 16-17, 2024," said Wipro in a regulatory filing.

On the bourses, Wipro shares have jumped about 20 per cent in the past six months while it has zoomed about 34 per cent in the past year.

Meanwhile, here’s a look at what brokerages expect from Wipro in Q2FY25:

HSBC
 

Analysts at HSBC highlighted ongoing headwinds in Wipro’s manufacturing and energy & utilities (E&U) sectors. They expect revenues to remain flat quarter-over-quarter (Q-o-Q) in USD terms, while anticipating a 50 basis points (bps) improvement in Ebit margin. The expected wage hike has been deferred to the second half of the fiscal year. Key focus areas, analysts believe, include the outlook for Wipro’s large-deal pipeline and consulting business, with HSBC predicting a pickup in growth in the second half.

For Q2FY25, HSBC forecasts revenue of Rs 21,827.7 crore (down 3.1 per cent Y-o-Y and 0.6 per cent Q-o-Q), $ revenue at $2,626 million (down 3.2 per cent Y-o-Y), an Ebit of Rs 3,710.7 crore (up 12.2 per cent Y-o-Y & 2.3 per cent Q-o-Q), an Ebit margin of 17 per cent, IT services Ebit margin of 17.4 per cent, and a net profit of Rs 6,699.8 crore.

Nuvama
 

Nuvama analysts anticipate flat IT services revenue growth in constant currency (CC), with a slight increase of 0.5 per cent Q-o-Q in USD. They predict a 25 bps decline in margins due to a one-month impact from the wage hike effective June 2024. Nuvama expects Wipro to guide for -1 per cent to -1 per cent CC Q-o-Q revenue growth for Q3 FY25, stressing upon the need for updates on the consultancy business and deal execution.

According to Nuvama, the expected revenue is Rs 22,265.8 crore (down 1.1 per cent Y-o-Y & up 1.4 per cent Q-o-Q), with $ revenue at $2,639 million (down 2.7 per cent Y-o-Y and up 0.5 per cent Q-o-Q), Ebit of Rs 3,599.1 crore (up 7.9 per cent Y-o-Y and down 0.2 per cent Q-o-Q), an Ebit margin of 16.2 per cent, and a net profit of Rs 2,969.1 crore.

Kotak Institutional Equities
 

Kotak Institutional Equities analysts project a 0.1 per cent revenue growth in constant currency, highlighting that growth in the financial services vertical may be offset by weaknesses in the energy & utilities and manufacturing sectors. 

They expect stable Ebit margins despite the wage revision effective September 1, 2024, and a likely decline in employee utilisation rates. Kotak analysts see potential tailwinds from INR depreciation and strict cost management. 

The anticipated large deal total contract value (TCV) is around $1.2 billion, with a higher mix of renewals compared to Q1 FY25. Moreover, they forecast revenue guidance for the December 2024 quarter at -0.5 per cent to +1.5 per cent.

Kotak’s expectations for Q2FY25 include revenue of Rs 22,352.3 crore (down 0.8 per cent Y-o-Y), $ revenue at $2,651 million (down 2.3 per cent Y-o-Y), Ebit of Rs 3,720.1 crore (up 11.6 per cent Y-o-Y), an Ebit margin of 16.6 per cent, and adjusted net profit of Rs 3,052.2 crore (up 15.3 per cent Y-o-Y).

Phillip Capital
 

Analysts at Phillip Capital predict flat IT services revenue growth in constant currency, aligning with the guided range of -1 per cent to +1 per cent. They expect growth to be led by the BFSI and healthcare verticals, although weakness in energy & utilities could offset this. Phillip Capital foresees stable IT services margins for Q2, as Wipro's margin levers—utilisation, subcontracting, SG&A, and offshore operations—are largely optimised. Key areas of focus include Q3FY25 guidance, consulting outlook, deal win to revenue conversion comments, vertical outlook, and margin prospects.

Phillip Capital projects revenue of Rs 22,162.9 crore (down 1.6 per cent Y-o-Y and up 0.9 per cent Q-o-Q), $ revenue at $2,639 million (down 2.7 per cent Y-o-Y and up 0.5 per cent Y-o-Y), Ebit of Rs 3,628.5 crore (up 8.8 per cent Y-o-Y and 0.6 per cent Q-o-Q), an Ebit margin of 16.4 per cent, and profit after tax (PAT) of Rs 3,003.2 crore (up 13.5 per cent Y-o-Y).