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    Wipro

    WIPROGood
    Information Technology·17 Jul 2025
    Management Summary

    Wipro reported a mixed Q1 FY26, with IT services revenue declining 2% QoQ in constant currency, within its guidance range. Despite ongoing macro uncertainties, the company demonstrated strong deal momentum, securing $5 billion in TCV bookings, driven significantly by large deals and a strategic focus on AI and modernization. Operating margins expanded year-on-year, and management expressed confidence in a stronger H2 FY26, contingent on successful execution of the new deal pipeline and continued operational excellence.

    Highlights

    8

    • IT services revenue of $2.59 billion, with 2% QoQ degrowth in constant currency.

    • IT services operating margin at 17.3%, an expansion of 80 bps YoY.

    • Total contract value (TCV) bookings reached $5 billion, a 51% YoY growth.

    • Large deal bookings were $2.7 billion, up 131% YoY, including 16 large deals and 2 mega deals.

    • Net income grew 10.9% YoY, and EPS was INR 3.2, up 10.8% YoY.

    • Free cash flow generation was robust at 115% of net income.

    • An interim dividend of INR 5 per share was declared.

    • Guidance for Q2 FY26 IT services revenue is $2.56 billion to $2.612 billion, translating to -1% to +1% sequential growth in constant currency.

    Key financials

    Single quarter

    09 metrics
    1. 01IT Services Revenue$2.59B-2.3%YoY
    2. 02IT Services Operating Margin17.3%+0.8%YoY
    3. 03Net Income Growth10.9%+10.9%YoY
    4. 04EPS₹3.2+10.8%YoY
    5. 05Free Cash Flow to Net Income115%

    Segment breakdown

    YoY Growth (CC)Sequential Growth (CC)
    Americas 15.8%20%
    Americas 2-2.7%-1.7%
    Europe-11.6%-6.4%
    APMEA—60%
    BFSI-3.5%-3.8%
    Healthcare3.5%50%
    Consumer-5.7%-4%
    Technology and Communication-30%40%
    Energy, Manufacturing, and Resources-2.4%-70%
    Capco6%—
    Heatmap· 2 shared metrics

    Guidance & targets

    5
    CategoryTargetPriority
    Revenue
    IT Services Revenue
    $2.56 billion to $2.612 billion
    		Medium
    Revenue Growth
    IT Services Revenue Sequential Growth (Constant Currency)
    minus 1% to plus 1%
    		Medium
    Capital Allocation
    Payout Ratio
    minimum of 70%
    		High
    Dividend
    Dividend Frequency
    twice a year
    		High
    Margin
    Operating Margin Band
    17% to 17.5%
    		Medium

    Risks & concerns

    6
    RiskSeverity

    Macro uncertainty and muted overall demand

    The quarter started with significant macro uncertainty, leading to muted overall demand from clients. — Management acknowledged

    medium

    Impact of tariffs on Consumer and EMR sectors

    Retail, CPG, and manufacturing within Consumer and EMR sectors have been most affected by tariffs, leading to a more cautious client mode. — Management acknowledged

    medium

    Margin pressure from upfront investments in large, competitive deals

    Large deal wins, often involving vendor consolidation and competitive pricing, require upfront investments and have a weaker margin profile, which will create some pressure on overall margins. — Both acknowledged

    medium

    Headwinds and uncertainty in the European market

    Europe continues to face headwinds and market uncertainty, although client-specific issues are now behind them, and a turnaround is expected in H2 FY26. — Management acknowledged

    medium

    Tight discretionary budgets and impact on smaller deals

    Discretionary budgets remain tight, and while the environment seems to have stabilized, it has impacted smaller and medium deals, with clients prioritizing cost optimization. — Management acknowledged

    medium

    Areas of Evasion(1)

    • Naming specific competitors

    Q&A highlights

    3

    “You are correct that our TCV has been growing much faster than the ACV. And this is also because the deal tenors have been going up. Our pipeline has a good balance of both vendor consolidation, cost takeout deals, which are typically longer tenor and deals that are coming in in the areas of data, AI, and modernization that Srini alluded to.”

    Clarifies the dynamics behind strong TCV growth, indicating longer deal tenors and a mix of deal types that influence ACV conversion and future revenue recognition.

    asked by Abhishek Kumar

    2 min read5 chapters

    Detailed Narrative

    01

    Q1 FY26 Performance Overview

    Wipro reported IT services revenue of $2.59 billion for Q1 FY26, experiencing a 2% sequential degrowth in constant currency, which was within the company's guidance range. On a year-on-year basis, revenue declined by 2.3% in constant currency. Despite the revenue contraction, the IT services operating margin expanded by 80 basis points year-on-year to 17.3%, reflecting continued focus on operational efficiency. Net income grew 10.9% YoY, and EPS stood at INR 3.2, up 10.8% YoY, even after absorbing a one-time📎 restructuring cost of INR 246 crores.

    02

    Strong Deal Wins and Pipeline Momentum

    The quarter was marked by robust deal momentum, with total contract value (TCV) bookings reaching $5 billion, a significant 51% year-on-year growth. Large deal bookings were particularly strong, increasing 131% year-on-year to $2.7 billion, and included 16 large deals, two of which were mega deals. These wins were largely driven by vendor consolidation and clients prioritizing initiatives with immediate impact, such as cost optimization and AI, data, and modernization programs. Management expressed confidence that these bookings, along with a healthy pipeline, position the company for a stronger second half of the fiscal year.

    03

    Geographic and Sectoral Performance

    Geographically, Americas 1 grew 0.2% sequentially and 5.8% YoY in constant currency, while Americas 2 declined 1.7% sequentially. Europe continued to face headwinds, declining 6.4% sequentially and 11.6% YoY, though management anticipates a turnaround in H2 FY26, with revenue from the large Phoenix deal expected to start in Q3. Sector-wise, BFSI demand remained strong but declined 3.8% sequentially. Healthcare grew 0.5% sequentially, and Technology and Communication grew 0.4% sequentially, driven by increased AI investments. Consumer and EMR sectors were more cautious, affected by tariffs.

    04

    Margin Outlook and Capital Allocation

    Wipro's operating margin of 17.3% aligns with its aspirational band of 17-17.5%. However, management indicated that the execution of large, competitive deals would require upfront investments, potentially creating some margin pressures in the coming quarters. The company remains committed to its revised capital allocation policy, aiming to pay out a minimum of 70% of net income over a three-year block. Going forward⏳, Wipro endeavors to pay dividends twice a year, typically after June and December quarter results, subject to cash position and Board approval.

    05

    Strategic Focus on AI and Modernization

    Wipro is actively building an 'AI-first, AI-everywhere' enterprise, integrating AI capabilities into both industry and cross-industry solutions. The company noted a clear trend of mini-AI projects moving to scale and production, with clients accelerating their AI, data, and modernization programs. Examples include using AI for hyper-personalized wealth management, predictive industrial insights, and deploying over 200 AI-powered agents for smarter lending and intelligent claims processing. This strategic alignment with client priorities is a key driver behind recent deal wins.

    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.