The lackluster performance of IT service companies in the June 2025 quarter was highlighted once again by the quarterly results of Wipro that were declared after the close of Thursday trade. Nervous investor sentiment led to this stock declining 0.9 % to Rs 260.25 on Wednesday.
Takeaways from June 2025 quarter results
Wipro reported a 2 % quarter – on – quarter constant currency decline in its key IT services revenues at Rs 22,080 crore in the first quarter of FY 26. And when the company had declared its fourth quarter of FY 25 results in April 2025, it had given sequential guidance of (-)3.5% to (-)1.5% in constant currency terms for its IT Services business revenues in the June 2025 quarter.
Earlier, Tech Mahindra reported a fall of 0.2 % on a q-o – q basis in its consolidated revenues at Rs 13,351 crore in the June 2025 quarter, while HCL Tech’s revenues of Rs 30,349 crore in the June 2025 quarter, and on a constant currency basis revenue was down 0.8 % q – o – q.
Higher operating costs also resulted in Wipro’s core consolidated operating profit margin shrinking 130 basis points q-o-q to 19.4 % in the June 2025 quarter. Similarly, HCL Tech‘s core operating profit margin was 19.9 % in the June 2025 quarter, a fall of 150 basis points on a q-o-q basis.
And Wipro’s consolidated net profit at Rs 3,336.5 crore in the first quarter of FY26 declined 7 % q-o-q. HCL Tech’s net profit was Rs 3,844 crore a fall of 10.8 % on a q-o-q basis.
Meanwhile, Wipro expects the revenues of IT services business in September 2025 quarter to be somewhat better – it has provided for a sequential guidance of (-)1.0% to 1.0% in constant currency terms.
Earlier in the week, HCL Tech had marginally raised its FY 26 growth outlook – it has highlighted company revenue growth is expected to be between 3 – 5 % y-o-y in constant currency vis-à-vis its earlier forecast of 2 – 5 % y-o-y in constant currency that was made while declaring its fourth quarter of FY 25 results in April 2025.
Investors on Dalal Street
Wipro stock hit a 52-week low of Rs 225 on 7 April 2025 and it ended Thursday’s trade 0.9 % lower at Rs 260.3.
Tech Mahindra had declared its results on Wednesday, and on Thursday, the stock fell 2.8 % to Rs 1,563. The stock has risen considerably from its 52-week low of Rs 1,209.7 that was reached on 7 April 2025.
Investors on Dalal Street have been skeptical on the growth outlook for IT services companies, given the muted growth in IT spending in the key US market amidst the tariff war of the Trump administration.
Valuations
Wipro trades at a P/E of nearly 20 times estimated consolidated FY 26 earnings. Tech Mahindra trades at a P/E of more than 30 times estimated consolidated FY 26 earnings.
Clearly, there are no signs of improvement in IT spending in the key US market over the next few quarters. Until there’s a turnaround, this is perhaps a wait and watch opportunity at best.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
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