Wipro Q1 results preview: Topline may fall 1.6% QoQ on weak tech spends; Q2 guidance likely to be muted

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Wipro, the fourth largest Indian IT services company, is set to announce its earnings for the first quarter of fiscal 2024. The IT major is widely expected to report a weak quarter in line with the industry peers, witnessing a sequential decline in revenue and operating margin.

Weak demand continues for Wipro in Q1FY24 with technology and BFSI verticals more impacted due to macro weakness. Meanwhile, TCV to revenue conversion is progressing well and deals are ramping up as per the company’s plan, analysts said.

Wipro’s revenue growth is expected to remain muted and within the guidance range of 1-3% decline QoQ in CC terms. The company is likely to report around 1.6% sequential decline in revenue in constant currency terms for the IT services segment at around ₹23,000 crore in Q1FY24 given the continued weakness in its banking and consulting business.  It is expected to see a 2% QoQ decline in USD revenue in the IT services segment after factoring in 30 bps cross-currency tailwinds.  Also Read: IT sector’s profit pie drops to 5-year low “Deal pipeline during the quarter has remained at similar levels as previous quarter.

Pipeline to TCV conversion is slowing and the nature of deals has shifted to cost take out deals," said ICICI Securities. For Q2FY24, the brokerage expects muted 0-2% QoQ CC revenue growth guidance given there are no mega deal announcements and no signs of incremental demand pick up in Wipro’s key banking and retail verticals that have been its primary growth drivers in the past.

Wipro’s margins are expected to be subdued in Q1FY24 due to muted revenue growth. The company’s IT Services’ EBIT margin is likely to remain flat at 16.2% sequentially.  Net profit of the company may decline in the range of 4%-5%