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    Wipro

    WIPROMixed
    Information Technology·17 Jan 2025
    Management Summary

    Wipro reported Q3 FY25 IT services revenue of $2.63 billion, slightly above guidance, driven by strong execution and margin expansion to a 12-quarter high of 17.5%. Deal wins remained robust at $3.5 billion TCV, with notable strength in Americas 1 and the Health and BFSI sectors. While macroeconomic challenges persist, particularly in Europe and APMEA, the company sees discretionary spending slowly returning and is committed to AI-led innovation and talent development, with a cautious Q4 revenue guidance.

    Highlights

    8
    • IT services revenue at $2.63 billion, reflecting 0.1% sequential growth and 0.7% YoY degrowth in constant currency.

    • Total Contract Value (TCV) bookings reached $3.5 billion, with 17 large deals totaling $1 billion.

    • Operating margins expanded to a 12-quarter high of 17.5%, up 0.7% QoQ and 1.5% YoY.

    • Capco business saw improved demand, with order book growing 9% YoY and revenue growing 11% YoY.

    • EPS/Net Income grew 24% YoY and 5% sequentially.

    • Interim dividend declared at Rs. 6 per share.

    • Q4 FY25 revenue guidance set at -1% to +1% sequential growth in constant currency.

    • 50,000 employees now hold advanced AI Certification.

    What Changed2

    vs Q4 FY25

    Guidance items3 → 5 (+2)Risks discussed5 → 2 (-3)

    Key financials

    Single quarter

    05 metrics
    1. 01IT Services Revenue$2.63B-0.7%YoY
    2. 02TCV Bookings$3.5B
    3. 03Operating Margins17.5%+1.5%YoY
    4. 04EPS/Net Income Growth+24%YoY
    5. 05Interim Dividend₹6

    Segment breakdown

    Sequential GrowthYoY Growth
    Americas 1 SMU3.9%3.7%
    Americas 2 SMU-0.6%1.2%
    Europe SMU-2.7%-4.6%
    APMEA SMU-2.1%-8%
    Health Sector6.7%4.5%
    BFSI Sector-1.9%3.4%
    Consumer Sector-0.9%0.4%
    Energy, Manufacturing, Resources Sector0.4%-8.7%
    Technology and Communications Sector-0.6%-5.3%
    Top Account7.3%
    Top 5 Accounts
    Top 10 Accounts
    Capco Business
    Heatmap· 2 shared metrics

    Guidance & targets

    5
    CategoryTargetPriority
    Revenue
    IT Services Revenue Growth (Constant Currency)
    -1% to +1% sequential growth
    Medium
    Revenue
    IT Services Revenue (USD)
    $2.602 billion to $2.655 billion
    Medium
    Margin
    Operating Margins
    Staying in the narrow band (around 17.5%)
    High
    Dividend
    Payout Percentage of Net Income
    70% or above
    High
    Headcount
    Campus Hiring
    10,000 to 12,000 people
    High

    Risks & concerns

    3
    RiskSeverity

    Macroeconomic challenges and soft demand in certain geographies/sectors.

    2024 was marked by macroeconomic challenges; Europe and APMEA remained soft, and EMR and Consumer sectors still need to recover.Management acknowledged

    medium

    Currency volatility (Rupee depreciation).

    The rupee has been depreciating, but the company carries hedge books to manage volatility.Analyst acknowledged

    low

    Areas of Evasion(1)

    • Specific drivers for the Q4 flat guidance despite some positive trends, explained by referencing 'current visibility' and ongoing softness in some regions/sectors.

    Q&A highlights

    3

    “Our current large deal pipeline is robust, and we are seeing good traction across geographies... Our large deal TCV has been at $1 billion, which is still up 6% year-on-year by value and up by three deals by count.”

    Addresses investor concerns about converting strong deal wins into overall revenue growth and the path to mid-single-digit growth.

    asked by Vibhor Singhal

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 FY25 Financial Performance Overview

    Wipro reported IT services revenue of $2.63 billion for Q3 FY25, reflecting a sequential growth of 0.1% and a year-on-year degrowth of 0.7% in constant currency, slightly exceeding the upper end of their guidance. Operating margins reached a 12-quarter high of 17.5%, expanding by 0.7% quarter-on-quarter and 1.5% year-on-year, even after absorbing two months of incremental wage revision. The company's EPS or net income grew 24% year-on-year and 5% sequentially, supported by margin expansion and better treasury returns.

    02

    Robust Deal Wins and Capco Performance

    The quarter saw strong deal momentum with Total Contract Value (TCV) bookings of $3.5 billion, including 17 large deals valued at $1 billion. The Capco business demonstrated improved demand, with its order book growing 9% year-on-year and revenue increasing by 11% year-on-year. Management highlighted a vendor consolidation deal with an American retail company and a technology modernization contract with a Middle Eastern airline as examples of recent wins, both leveraging AI-led solutions.

    03

    Strategic Market Unit and Industry Sector Performance

    Americas 1 showed strong growth, up 3.9% sequentially and 3.7% year-on-year, primarily driven by health, technology, and communication sectors. Americas 2 grew 1.2% year-on-year, led by BFSI. However, Europe and APMEA remained soft, degrowing 4.6% and 8% year-on-year respectively. Health maintained momentum with 4.5% YoY growth, and BFSI grew 3.4% YoY despite a sequential degrowth of 1.9% due to furloughs. Energy, Manufacturing, and Resources (EMR) declined 8.7% YoY, while Technology and Communications degrew 5.3% YoY.

    04

    AI-led Innovation and Talent Development

    Wipro continues to invest heavily in AI, with 50,000 employees now holding advanced AI Certification. The company is leveraging AI tools and platforms across the software development cycle and internal processes, positioning itself as an early adopter of Agentic AI for client impact in areas like customer service and supply chain management. In talent development, the Wipro Leadership Institute is set to train over 600 leaders in FY25 through in-house programs and collaborations with global institutes.

    05

    Capital Allocation and Q4 FY25 Outlook

    The Board of Directors approved increasing the payout percentage to 70% or above of net income cumulatively over a three-year period, effective FY26, and declared an interim dividend of Rs. 6 per share. For Q4 FY25, Wipro guided for a sequential revenue growth of -1% to +1% in constant currency, translating to $2.602 billion to $2.655 billion. Management expressed confidence in sustaining operating margins in the narrow band around 17.5% for the next quarter.

    06

    Hiring and Demand Environment

    The hiring engine has 'kicked off,' with plans to hire 10,000 to 12,000 people from campuses in the next fiscal year (FY26), supplemented by lateral hiring. Management noted a positive sign in discretionary spending slowly returning, particularly in the BFSI segment in Americas. While the overall pipeline remains healthy, demand in Europe and APMEA continues to be soft due to challenging economies, leading to cost-trimming by clients in those regions.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.