Analyst Meet / AGM     18-Jan-25
Conference Call
Wipro
IT Services revenue to be in the range of US $ 2,602 to US $2,655 million in Q4FY2025

Wipro hosted a conference call on January 17,2025. In the conference call, the company was represented by Mr Srini Pallia- CEO and Managing Director and Ms Aparna Iyer-CFO.

Key takeaways of the call

2024 was a year marked by macro-economic challenges; however, the company is hopeful and resilient of 2025. The company’s clients are cautiously optimistic and discretionary spending is slowly coming back. While cost optimization remains key, the company expects significant growth in AI spending. The company is committed to driving innovation for the clients by leveraging the power of AI.

Performance

 

In Q3, IT services segment revenue was at US $2,629 million, a growth of 0.1% QoQ in CC terms and declined by 0.7% YoY. This is slightly higher than the upper end of the guidance which the company provided earlier.

Capco business continued to witness improved demand. Order book grew by 9% YoY and revenue grew by 11% YoY.

The company witnessed steady growth in demand across America’s while Europe and APMEA remained soft for the company.

America 1 delivered a sequential growth of 3.9% QoQ and 3.7% YoY.  Growth was primarily led by health care, technology and communication sector.

America 2 had a sequential revenue decline by 0.6% and a growth of 1.2% YoY. Growth on a YoY basis was led by BFSI sector.

Europe witnessed a sequential decline of 2.7% QoQ and 4.6% YoY. While APMEA witnessed a sequential decline of 2.1% QoQ and 8.0% YoY.

Industry vertical wise, 3 of the 5 verticals recorded YoY growth in Q3FY2025 reflecting progress across key areas.

Healthcare vertical grew by 6.7% QoQ and 4.5% YoY. While BFSI de-grew by 1.9% QoQ and grew by 3.4% YoY. Consumer de-grew by 0.9% QoQ while it grew by 0.4% YoY. Energy, manufacturing and resources vertical grew by 0.4% QoQ and de-grew by 8.7% YoY. Technology and communication vertical de-grew by 0.6% QoQ and 5.3% YoY.

Large Accounts: The company continues to focus on large accounts in core markets and priority sectors. In Q3, the company achieved a sequential growth of 7.3% in large accounts. Top 5 and Top 10 accounts grew by 3.7% and 1.8% respectively. The company remains committed to investing and scaling large accounts. The company is demonstrating client centricity by driving greater value, increasing wallet share and expanding new lines of business.

Margins: EBIT margin stood at 17.5% ( 12 quarter high) an increase of 0.7% QoQ and 1.5% YoY. This was achieved after absorbing the salary increments which the company rolled out to its associates.

Improvement in margins was on back of execution rigor both in core and consultancy business.

Tailwinds for margin improvement are utilization, off shoring and reduction in overheads. The company does not expect any particular headwinds for margins; however the rupee is depreciating and is volatile in the recent past.

The company expects EBIT margins to remain in a narrow band.

Net income grew by 5% QoQ and 24% YoY.

 

Effective tax rate: Effective tax rate stood at 24.0% in Q4FY2025.

Depreciation: There is no one off in depreciation in Q3FY2025. The company expects depreciation to remain at Q3 levels going forward.

Order bookings:

Total bookings was at TCV US $3,514 million, an increase of 7.3% YoY. The company booked 17 large deals. Large deal bookings was at TCV $ 961 million, an increase of 6% YoY in constant currency. The deal wins were across markets and sectors.

Employees: 50000 employees now hold advanced AI certifications.

Employee attrition (LTM) was 15.3% for the quarter. The company expects it to reduce going forward.

The company plans to go for campuses to hire fresher’s in the coming quarter. The company plans to hire 10000-12000 fresher’s in the coming financial year. The company also expects lateral hiring to pick up.

The company remains focussed on building a globally diverse team with high performance culture. The company is promoting internal talent and also bringing in top external talent.

The company is investing significantly in leadership development. In FY2025, the company has trained over 600 leaders in Wipro leadership institute through a combination of in-house leadership sessions and programmes created with leading global institutes.

 

Guidance: 

Revenue from IT Services business segment to be in the range of $2,602 million to $2,655 million. This translates to sequential guidance of -1.0 % to 1.0 % in constant currency terms.

Outlook:

Large deal pipeline remains strong. Good traction across geographies. Pipeline is broad based across the sectors.

Good traction in large deals in BFSI vertical and EMR segment. BFSI is strong in Americas, Europe and India and in EMR manufacturing is strong in Europe compared to US.

Healthcare, consumer, and Technology and communication verticals, the company is witnessing more traction in medium to large size deals of US$ 50-100 million.

Discretionary spends: In CAPCO the company had good bookings and revenue growth YoY.

The company is witnessing positive sign in America for discretionary spends primarily in BFSI segment. There is some uptick in some other sectors but still not secular currently.

The company is seeing good demand in America and expect it to continue. While in Europe, the economy is a challenge which has put some pressure on clients to bring down cost and become more efficient which the company sees as an opportunity going forward.

Capital Allocation: Capital allocation policy revised to increase the payout percentage from 45% - 50% to 70% or above of the net income cumulatively on a block of 3-year period which is been approved by the Board of Directors.

Dividend: The board of directors have declared interim dividend of Rs 6 per share.

 

Management Commentary:

Srini Pallia, CEO and Managing Director, said “In a seasonally weak quarter, our strong in quarter execution helped us deliver above the top end of our revenue guidance. We also achieved our highest margins in the past three years while continuing to invest in our people. We closed 17 large deals with a total value of $1B. We are advancing steadily and investing decisively to lead our clients in an AI-driven future.”

Aparna Iyer, Chief Financial Officer, said “We expanded margins for a fourth consecutive quarter, enabling us to achieve our previously stated target margin of 17.5%. Our EPS grew 24.4% YoY and operating cash flow was at 146.5% of net income. We are pleased to share that the board has approved our revised capital allocation policy that increases the committed payout percentage to 70% or above in a block of 3 years. In addition, board has also declared an interim dividend of INR 6 per share.”

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