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Published: October 18, 2023
Updated: October 18, 2023

Wipro's Q2 Earnings Outlook: Challenges and Opportunities

Wipro is set to release its Q2FY24 earnings amid challenging macroeconomic conditions. While the company may face a decline in revenue in constant currency (CC) terms, net profit is expected to see a year-on-year (YoY) increase. This article delves into what investors can anticipate in Wipro's upcoming results, focusing on growth guidance, deal pipeline, and margins outlook.

Challenging Q1FY24 Performance:

In the previous quarter, Wipro's performance fell short of expectations. Although the company reported a consolidated net profit of ₹2,870.1 crore, signifying an 11.95% YoY increase, revenue growth remained in the single digits at 6% YoY.

Analyst Expectations:

As Wipro prepares to unveil its Q2FY24 results, here's a summary of what top analysts expect:

Revenue Expectations:

Analysts foresee a sequential revenue decline in CC terms, aligning with the Q2 guidance range. Operating profit margin, however, is expected to remain stable with a potential YoY increase.

Impact on IT Services:

Wipro's IT services CC revenue may decline in the quarter, reflecting the guided range. Revenue could be affected by factors such as weaknesses in the BFSI and Hitech verticals, as well as the consulting business. However, profit after tax (PAT) may experience a 15.3% YoY rise.

Margin Stability:

Wipro's IT services margins are projected to remain steady at 16.1%.

Challenges and Focus Areas:

The Q3FY24 growth guidance, consulting outlook, large deal wins, pipeline updates, vertical performance, and margins outlook will be under close scrutiny.

Revenue Outlook:

Adverse macroeconomic conditions may lead to a revenue decline, particularly in verticals beyond BFS and consumer. The consulting business is expected to face challenges due to cutbacks in discretionary spending and project prioritization. Margin recovery is expected due to deferred wage hikes and cost-controlling measures.

Financial Forecast:

Wipro's IT services revenue may decline in US dollar terms, and overall revenue in rupee terms may also slip. PAT could show a QoQ decline but a YoY increase.

Guidance for Upcoming Quarters:

Expectations include a sequential revenue decline and a wider range for future revenue guidance, reflecting broader industry challenges.

Wipro's Q2FY24 earnings are poised to reflect the ongoing economic challenges. As investors eagerly await the results, they will focus on the company's strategies for growth, stability in senior management, outlook for consulting, and its positioning in the competitive landscape. The path ahead for Wipro is filled with both challenges and opportunities, and investors will closely watch how the company navigates these dynamics.