Actual vs. expectations

Revenue inline with expectations while overall margins and IT Services EBITM above our estimates.

Likely stock reaction

Neutral

Key positives – Operating performance beat, broad-based growth recovery, strength in top client (3.9% QoQ)

Result Summary

• Wipro reported revenues of USD2.66bn, +1.4%/-1.9% QoQ/YoY (CC 0.6% QoQ; closer to the upper end of the guidance), tad better than our expectations. (Q2FY25 revenues – TCS: US$7.67bn, +1.1% CC QoQ; HCLT: US$3.45bn, +1.6% QoQ).
• Reported EBITM expanded 30bps QoQ to 16.7%, above our expectations of 16.4%.
• IT services EBITM expanded ~30bps QoQ to 16.8%, above our expectations of 16.5%. (TCS IT EBITM fell by 60bps QoQ to 24.1%; HCLT EBITM expanded 150bps QoQ to 18.6%).
• Reported profits at Rs32.1bn (6.8% QoQ, 21.3% YoY), above our estimates of Rs30.3bn.
• Guidance: IT services revenue is expected to be in the range of -2% to +0% QoQ CC in Q3FY25 (below our expectations of -1% to +1%).
• The company has signed large deals with TCV of US1.5$bn in Q2. Overall order booking were US$3.6bn in Q2 (book-to-bill of ~1.3x), down 5.9% CC YoY.
• The board has approved issue of 1:1 bonus shares.

Growth by Verticals (all in CC terms)

• Financial Services: 2.7% QoQ
• Manufacturing: -2.0% QoQ
• Healthcare: -0.5% QoQ
• Communications: 1.6% QoQ
• Energy: -3.7% QoQ
• Consumer Business Unit: 0.3% QoQ
• Technology: 1.6% QoQ

Growth by Strategic market units (all in CC terms)

• Americas 1: 1.2% QoQ
• Americas 2: 0.8% QoQ
• Europe: -0.1% QoQ
• APMEA: 0.3% QoQ

Manpower details

Total Headcount:233,889, +0.4% QoQ/-4.4% YoY

TTM Attrition (IT services excl. DOP): 14.5%, V/s 14.1% in Jun’24

Con call at 7:00pm IST today