Wipro Q1 Results Preview: Will Azim Premji's IT Company Witness Turnaround And Outperform Peers?

Leading tech giant, Wipro will present its financial results for the quarter ending June 2024 period, later on July 19. Accordingly, this Azim Premji-backed stock will be focused on BSE and NSE. In Q1FY25, Wipro is expected to report flat revenue, while its EBIT margin is likely to increase sequentially due to cost containment and efficiency measures. The company's FY25 guidance will be keenly watched.

Ahead of Q1 results, Wipro's share price ended at Rs 573.20 apiece on BSE, up by 2.43% with a market cap of Rs 2,99,810.80 crore. Also, during the trading session of July 18, the stock touched a new 52-week high of Rs 574.40 apiece.

Wipro will announce results for the first quarter ended June 30, 2024, on Friday, July 19, 2024, after stock market trading hours in India. The results will be available in the Investors section of the company's website.

In the previous quarter (Q4FY24), Wipro's PAT stood at Rs 2,834.6 crore, a growth of 4.95% from Rs 2,694.2 crore in Q3FY24. However, Q4FY24 PAT was down by 8.5% from its profit of Rs 3,074.5 crore in Q4 of last year. Further, consolidated revenue came in flat at Rs 22,208.3 crore in Q4FY24, versus Rs 22,205.1 crore in Q3FY24. However, revenue declined by 4.4% from Rs 23,190.3 crore in the same quarter a year ago.

Also, in Q4FY24, in dollar terms, Wipro's IT services segment revenue was at $2,657.4 million, an increase of 0.1% QoQ and a decrease of 6.4% YoY. While non-GAAP constant currency IT Services segment revenue decreased 0.3% QoQ and 6.6% YoY. Meanwhile, the IT services operating margin for the quarter was at 16.4%, up by 40 bps QoQ.

What to expect from Wipro in Q1FY25?

Kotak Institutional Equities On Wipro Q1 Results:

We expect flat revenues for the quarter. Revenues will be above the midpoint of guidance of -1.5- 0.5%. We attribute relatively strong performance to strength in CAPCO and likely recovery in the Americas market.

We forecast a 30 bps increase in EBIT margin qoq due to cost containment and efficiency measures. We forecast strong deal signings after multiple quarters of disappointment. Wipro announced its first mega-deal in 2021 in the communications vertical. The company has signed other deals as well besides the mega-deal announced recently.

We expect revenue growth guidance of -1 to 1%. We expect growth in the Americas to be offset by weak Europe and APMEA. We expect investor focus on (1) reasons for continued senior leadership attrition, (2) efficacy of measures taken by the new CEO to turn around the business, along with progress on five focus areas, (3) sustenance of green shoots in the consulting business (Capco and Rizing), (4) positioning in cost take-out and vendor consolidation deals where Wipro can be vulnerable and (5) margin levers to meet aspirational margin level of 17%+.

BOBCAPS On Wipro's Q1 Results:

For Wipro, the brokerage estimates (0.5%) CC QoQ revenue growth in 1QFY25 as against (1.5%) to 0.5% CC growth guidance. It expects EBIT margin to remain range-bound at ~16%, while TCV should be in the US$ 3bn-US$4bn.

Conversion of TCV to revenue is a key monitorable as it seems to be more acute than its peers.

The market is watching how much the new CEO Srini Pallia has had an impact in terms of order inflow and revenue growth and if he can deliver a revenue growth surprise in 2QFY25. We believe a positive revenue growth guidance may help keep the stock up after a strong performance in the last 2-3 months.

Axis Securities On Wipro Q1 Results:

We expect Wipro to report revenue growth of 0.9% QoQ in rupee terms and its operating margins are likely to expand on account of lower onsite expenses. Key monitorables would be a) Deal TCV/pipeline, b) Pricing scenario, and c) Outlook on new deals.

Wipro is a leading technology services and
consulting company focused on building innovative solutions that address clients' most complex digital transformation needs.