Hits And Misses! How Azim Premji-Led Wipro Performed In Q2FY24

Yet another tech giant has announced its September 2023 quarter earnings for FY24. This time it would be Azim Premji-backed Wipro who delivered its Q2FY24 numbers, which were broadly mixed. While Wipro posted a feeble performance in profitability, its revenue however gained momentum in rupee terms. Dollar revenue declines as well.

In Q2FY24, Wipro posted a consolidated net profit of Rs 2,646.3 crore in the quarter ending September 30, 2023, period, registering a decline of 7.8% from a profit of Rs 2,870.1 crore in the preceding quarter. The PAT was flat compared to a profit of Rs 2,659 crore in Q2 of FY23.

While gross revenue stood at Rs 22,520 crore in the quarter, a decrease of 0.1% YoY. As for IT services revenue, the segment garnered $2,713.3 million, a decrease of 2.3% QoQ. Total bookings were at $3.8 billion, up by 6% YoY and large deal bookings were at $1.3 billion, up by 79.0% YoY.

Further, for Q3FY24, Wipro trimmed the revenue guidance of its IT Services business segment to be in the range of $2,617 million to $2,672 million in Q3FY24 compared to the earlier prediction of $2,753-2,811 million. This latest sequential guidance translates -3.5% to -1.5% in constant currency terms.

Here are the HITS and MISSES of Wipro's Q2FY24. Dhruv Mudaraddi, Research Analyst, StoxBox highlighted the following:

- Reported revenue declined marginally (down 1.4% QoQ / down 0.1% YoY) in rupee terms to Rs. 22,516 crores, and missed market estimates of Rs. 22,922 crores.

# IT services EBIT came in at Rs. 3,076 crores (down 18% QoQ / up 6% YoY), missing market expectations. The EBIT margin expanded to 16.1% (up 10 bps QoQ / up 100 bps YoY).

- Net income reduced to Rs 2,667 crores (down 7.1% QoQ / up 1.6% YoY), missing market estimates of Rs. 2,905 crores. The PAT margin contracted to 11.8% (down 73 bps QoQ / down 9 bps YoY).

- LTM attrition continued to moderate QoQ and came in at 13.4% in Q2FY24, a nine-quarter low.

The order book recorded for Q2FY24 stood at $3.8 billion. Large deal TCV stood at $1.3 billion - the highest in the last nine quarters.

- Wipro reported a headcount of 244,707 employees as of September 30, 2023, with a net utilization of 84.5%.

- For Q3FY24, Wipro guided for a revenue decline of 3.5% to 1.5% in constant currency terms.

Wipro Outlook Ahead:

Mudaraddi said, "Wipro Ltd. posted a muted set of numbers and missed all market estimates as a challenging environment in Europe put pressure on its revenue from IT services. The delays in the ramp-up of projects and degrowth in the BFSI, Manufacturing, and Energy and utilities sectors also weighed on the company's performance in the quarter. However, the focus on improving productivity and utilization has enabled the company to expand its IT services EBIT margin by 100bps YoY. Strong operating cash flow and a robust order book with a significant portion of large deals despite subdued market conditions augur well for the company."

He added, "As it continues to invest in its 'AI360' strategy and focuses on the reskilling of its manpower to make it AI-ready, Wipro is poised to create an early leadership position in the fast-evolving space and realize efficiencies faster than other competitors. The commentary on the delay in execution in the quarter, impact of macro headwinds on demand, the revival of demand in BFSI and Energy & Utilities sector, and ramp-up time for the new deals would be closely watched for further cues."