Wipro, an IT services company, is expected to have a subdued third quarter (October-December 2024) with constant currency revenue expected to decline. Analysts estimate a 0.6% year-on-year (YoY) revenue growth, with a range of 0.2% decline to 0.6% growth. In constant currency terms, revenue is expected to decline 1% quarter-on-quarter (QoQ) due to softness in key verticals such as communications and manufacturing, as well as the impact of furloughs and fewer working days.
Net profit is expected to rise 12% YoY, according to an average estimate of seven brokers. EBIT (Earnings Before Interest and Tax) margins are likely to fall due to the impact of wage hikes for two months in the quarter.
Analysts will be focusing on several key aspects, including discretionary spending across verticals, particularly in financial services, the outcome of annual budgeting exercises by clients, senior management attrition, margin levers, and wage hike announcements, as well as the composition of revenues.
Brokerages, including Motilal Oswal, Nomura, Nuvama, and JM Financial, have provided their views on Wipro’s third quarter performance. They expect revenue to decline 1% to 1.6% QoQ in constant currency terms, with EBIT margins falling by 20 to 50 basis points (bps) due to wage hike impact.
Key areas to watch out for include commentary on the consulting business, particularly in the BFSI (Banking, Financial Services, and Insurance) vertical, demand revival in developed markets, large deal pipelines, and outlook on client discretionary spend.