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Wipro Ltd. reported declining Q1FY25 revenues at $2,626mn, down 1.0% QoQ and 4.9% YoY in cc terms. In USD terms, reported revenue was down1.2% QoQ and 5.5% YoY. INR Revenue stood at INR219.6bn, down 1.1% QoQ and 3.8% YoY. In Q2FY25E management expects, IT service business segment to be in range between $2,600-2,652mn. During Q1, Order Book TCV stood at $3.3bn, down 11.8% YoY cc of which $1.2bn were large deal TCV. PAT for the quarter was INR30.4bn, up 5.2% YoY with EPS at INR5.8. Operating cash flows stood robust at 131.6% of net income at INR37.4bn.

• Management’s priority is to accelerate growth and therefore it had identified 5 strategic areas to achieve it last quarter. Firstly, to accelerate large deal momentum by working closely with clients and partners. Secondly, to strengthen relationships with large clients and partners and further identify accounts which has the potential to become large accounts. Thirdly, to focus on industry specific offerings and business solutions led by consulting and infused by AI. Fourthly, to build talented skill which is AI-ready and able to deliver industry specific business solutions. And lastly, to continue to simplify the operating model and focus on execution rigour with speed. Management is confident to build and adapt to these five strategies and accommodate technological shifts and market conditions as it shared its progress.
• The demand environment remains cautious and hence, short term challenges exist. Discretionary spends are similar to previous quarters as there is no improvement. Clients are still making conservative investments focusing on returns and better optimization. Management observes green shoots in BFSI vertical and is optimistic to returning to growth in medium term driving Americas 2. Consumer and Communication vertical have bottomed and shall help Americas 1 grow in further quarters. Pipeline in Europe remains strong and focus remains on its conversion to revenue. Management anticipates a muted Q2FY25, with revenue expected to be in the range -1.0% to +1.0% cc and margins to be range bound. Management identifies margin improvement levers as rotation, off-shoring, lowered SG&A expenses etc. and aspires margin to be in 17% range over long term.
• The top accounts continued to grow, accompanied by a growth in Americas1 SMU, BFSI and Consumer sectors. Americas 1 market unit grew marginally QoQ on the back of strong performance in health sector. Company sees strong traction on the order bookings side in Europe. The company possesses a robust pipeline for the future, with expectations of a rebound in the Manufacturing and Energy sectors, as well as Utilities, anticipated in H2FY25. Management will actively look for M&A opportunities going ahead too. Company continues to build on its ai360 strategy and preparing workforce for an AI-first future.
• Valuation:
•  Wipro has made substantial investments to strengthen its capabilities across the organisation. The investments in AI360 ecosystem, combined with the strategic value the consulting business brings to clients will help Wipro to stay competitive, resilient and a preferred partner for its clients. With significant upward stock movement over the last month, we downgrade our rating to REDUCE with a revised target price of INR558, implying a 22x PE on FY26E EPS of INR25.3.

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