India’s fourth-largest IT firm, Wipro, managed to beat both revenue and profit estimates in Q1, even as it continues to flag demand uncertainty due to geopolitical uncertainties and tariff-related headwinds. The company posted consolidated revenue of Rs 22,134 crore in Q1, down 1.6% sequentially, but higher than Bloomberg estimates of Rs 22,078 crore.
Quarter results
Profit for the quarter was Rs 3,336 crore, 6.7% lower than Q4FY25 but still above estimates of Rs 3,249 crore. The company won $5 billion worth of deals during the quarter, a multi-quarter high, with large deals jumping 50% sequentially to 16. “Building on the momentum from last quarter and supported by a strong pipeline, we are well-positioned for the second half,” said Srini Pallia, CEO and managing director, Wipro.
The company also pointed out that clients are largely focused on cost optimisation and vendor consolidation deals, while there are pockets of discretionary spending in data and AI projects.
“These large deals will need certain upfront investments for us to be able to convert them, and that’s going to be our number one priority. So in some sense, there is going to be pressure on our margins, but we are excited about the potential of growth that these deals bring,” said Aparna Iyer, chief financial officer, Wipro, during the post-earnings conference.
Operating margin in its largest segment, IT services, contracted by 20 basis points to 17.3%. The company noted that while utilisation has been nearly flat, there were some savings in the selling, general, and administrative (SG&A) costs, and overall, the revenue decline was offset through operational improvements.
Uncertainties
The ongoing uncertainties have particularly impacted the retail, consumer, and manufacturing sectors.
Its largest market Americas 1, which includes communications, media, tech, software, consumer, and health verticals in the US and the entire business of Latin America, reported a 0.2% sequential rise in revenue, while its two other large markets have shrunk. On a year-on-year basis, the market has grown about 5.8%.
“Health sector is powering the growth for Americas 1 business unit, while we also had a very good win in the communications vertical in Q1 of last year that continues to grow and build,” Iyer said.
While Americas 2 saw a 1.7% sequential decline in revenue, on constant currency terms, the European business unit saw a sharp drop of 6.4% on a quarter-on-quarter basis. The drop is ever steeper at 11.6% when compared to the same quarter in the last fiscal year.
So far, IT companies have posted a tepid Q1 picture, calling out delayed decision-making by clients and overall pullback in discretionary spending.
The country’s largest IT services company, Tata Consultancy Services (TCS), posted its weakest revenue growth in Q1 since the beginning of FY21. Meanwhile, India’s third-largest IT firm, HCLTech, reported a sharp decline in Q1 net profit and operating margin, along with nearly flat revenue growth.
Besides the larger peers, Tech Mahindra’s Q1 profit and revenue also came in slightly below Street expectations, and while L&T Technology Services managed to report profit slightly above expectations, revenue still fell short of analysts’ estimates.