Wipro Q1FY25 Preview: Analysts Divided on Earnings Outlook

Wipro is set to announce its Q1FY25 earnings today, amidst varied expectations from analysts. Some foresee a slight decline due to macroeconomic challenges and sectoral softness, while others anticipate modest growth driven by new deals and operational efficiencies.

Profit & Revenue Projections

According to approximately nine estimates, Wipro’s consolidated net profit for the quarter ended June is projected to rise by over 4% QoQ to around Rs.2,953 crore. However, revenue from operations is expected to remain flat. Certain brokerages project flattish revenues, slightly above the midpoint of their guidance range of (-)1.5% to 0.5%, attributing this to strength in CAPCO and a likely recovery in the America’s market.

EBIT Margin Expectations

Wipro’s EBIT margin for Q1FY25 is expected to decline by  around 20 basis points QoQ to 16.2%. Analysts suggest that recurring IT services EBIT margins will remain largely flat despite seasonal softness, due to ongoing cost optimization efforts.

Factors Influencing Earnings

Analysts have identified several key factors influencing Wipro’s earnings this quarter. They forecast a 0.9% QoQ revenue growth, primarily driven by new deals. Operational efficiencies could help offset increased SG&A expenses, following significant reductions in the previous quarter. This efficiency drive is likely to stabilize margins, despite overall revenue pressure. However, softness in key verticals such as retail and communications is highlighted, attributed to cautious client spending behavior these days.

Key Aspects to Monitor

Analysts will closely watch Wipro’s commentary on several key aspects, including new management’s initiatives in AI and consulting, and recovery signs in verticals like BFSI and healthcare. Investors will also look for updates on deal TCV/pipeline, pricing scenarios, and the ramp-up of new deals.

Context from Q4 FY24 Results

In Q4FY24, Wipro’s consolidated net profit was Rs.2,835 crore, marking an 8% decline from Rs.3,074 crore in Q4FY23. Operating revenue also dropped from Rs.23,190 crore to Rs.22,208 crore, a 4% YoY decline. These results set a challenging backdrop for Q1FY25 expectations.

Conclusion: As Wipro prepares to announce its Q1FY25 results, analysts and brokerages remain divided on the outlook. The interplay between new deal ramp-ups, operational efficiencies, and sector-specific challenges will be crucial in determining the company’s performance. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.