Wipro Limited , a leading technology services and consulting company, has announced its financial results for the quarter ended September 30. The company reported a modest increase in revenue and profit, driven by strong large deal bookings and growth in key markets.

Financial Highlights

Key Performance Indicators

• Large deal bookings reached $2.90 billion, showing a significant growth of 90.50% year-over-year.
• Total bookings for the quarter stood at $4.69 billion, up by 30.90% year-over-year.
• IT Services operating margin for Q2 was 16.70%, with an adjusted margin of 17.20% after accounting for a provision related to a customer bankruptcy.
• Operating cash flows were strong at ₹33.90 billion ($381.50 million), representing 103.80% of Net Income for the quarter.

Segment Performance

Wipro's IT Services segment, which accounts for the bulk of its business, showed mixed results across different markets:

The Europe and APMEA (Asia Pacific, Middle East, and Africa) markets showed positive growth, while Americas 2 experienced a slight decline. Notably, three out of four business units demonstrated sequential growth during Q2, indicating a gradual recovery for the IT services provider.

Management Commentary

Srini Pallia, CEO and Managing Director of Wipro, commented on the results: "Our revenue momentum is strengthening, with Europe and APMEA returning to growth, and our operating margins holding steady within the narrow band. Bookings surpassed $9.50 billion for H1. Our strategy is clear: remain resilient, adapt to global shifts, and lead with AI."

Aparna Iyer, Chief Financial Officer, added: "We are gradually returning to growth trajectory with three of our four SMUs growing sequentially in Q2. All key financial parameters continue to remain strong. Our large deal bookings in the first two quarters have now surpassed the large deal booking for full year."

Strategic Developments

Wipro announced a significant acquisition during the quarter. On August 21, the company entered into a definitive agreement to acquire the Digital Transformation Solutions (DTS) business unit of HARMAN, a Samsung company, for a total consideration including earnouts of $375 million. This acquisition is expected to enhance Wipro's capabilities in Engineering, Research & Development (ER&D) services and Information Technology (IT) services.

Outlook

For the quarter ending December 31, Wipro expects revenue from its IT Services business segment to be in the range of $2,591 million to $2,644 million. This translates to a sequential guidance of -0.50% to 1.50% in constant currency terms.

Wipro continues to focus on its AI-first strategy, introducing Wipro Intelligence™ to help clients scale confidently and shape the future in an AI-driven world. The company's strong deal pipeline and strategic initiatives position it well for future growth in the evolving technology services landscape.

As Wipro navigates the dynamic global market, its focus on large deals, AI-led transformation, and strategic acquisitions demonstrates its commitment to long-term value creation for clients and shareholders alike.

Wipro Limited is set to announce its Q2 FY24 results on October 16, with analysts projecting a mixed performance amidst challenging market conditions. Based on estimates from eight brokerages, the IT services giant is expected to show resilience in its financial metrics despite ongoing headwinds in the tech sector.

Financial Projections

Wipro's performance is anticipated to align with its guided range of -1% to +1% constant currency growth. The modest revenue increase is primarily attributed to the ramp-up of the Phoenix deal and other large contracts secured by the company.

Key Factors Influencing Performance

• Weak Discretionary Spending: The tech industry continues to face challenges with reduced client budgets for discretionary projects.
• Pricing Pressure: Large deals are experiencing pricing pressure, impacting overall margins.
• Deal Ramp-ups: The costs associated with ramping up large deals are expected to put pressure on margins in the short term.
• Currency Movements: Some analysts suggest potential margin improvements due to favorable currency fluctuations.
• Operational Efficiency: Efforts to enhance operational efficiency may partially offset margin pressures.

Looking Ahead

For the upcoming December quarter, Wipro is expected to guide for a 0-2% constant currency growth. This projection is supported by:

1. Continued ramp-up of large deals
2. Potential recovery in the European market

The total contract value (TCV) of large deals is estimated to be around $1.50 billion, indicating a healthy pipeline for future growth.

Market Perspective

Analysts note that Wipro's recovery pace remains slower compared to its larger peers in the IT services sector. Investors are likely to focus on several key areas:

• Margin movement trends
• Strength of the deal pipeline
• Management's commentary on visibility for second-half recovery

As the tech sector navigates through a period of cautious spending and economic uncertainty, Wipro's performance in Q2 FY24 will be closely watched as an indicator of broader industry trends and the company's ability to adapt to changing market dynamics.

Wipro's upcoming earnings release will provide crucial insights into its strategic initiatives and their effectiveness in driving growth amidst challenging market conditions.