Top-level exits add to the worries of Wipro’s restive shareholders
₹418.50 apiece. Wipro is putting on a brave face. In an exclusive interview with Mint, Wipro’s chief executive officer Thierry Delaporte, who took charge in July 2020, said he is not perturbed by the top-level exits.
In fact, he is confident that the company will make a strong comeback when market conditions improve. Wipro embarked on a turnaround strategy deployed by Delaporte primarily aimed at simplifying the organizational structure, increased focus on acquisitions and large deal wins. This, in turn, was expected to fuel revenue growth.
But given the tough demand conditions currently, the impact of the ongoing structural changes on the headline numbers has become difficult to evaluate, point out analysts. To be sure, Wipro is expected to underperform peers on growth in FY24. In the June quarter (Q1FY24), the sequential constant currency (CC) revenue growth of Wipro’s IT services segment had lagged peers Infosys, Tata Consultancy Services (TCS) and HCL Technologies.
In Q2, Wipro has guided for sequential CC revenue growth of -2 to 1%, which is unexciting. Such a wide range for Q2 guidance hint at elevated uncertainty and low visibility around clients’ spending behaviour, said JM Financial Institutional Securities’ analysts. “Besides, decline at the lower end suggest pressure on discretionary spend has not relented," JM’s analysts said in the Q1 results review report.
Management’s commentary on smaller deals will be key in Q2. “We don’t see tailwinds for (Wipro’s) margins especially with elevated onsite expenses and persisting supply-side pressures," said Omkar Tanksale, senior research analyst-IT, Axis Securities. So far in 2023, Wipro’s shares have underperformed the Nifty IT index.
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