Wipro Faces Stagnant Revenue Growth as Key Sectors Struggle

Wipro, a major player in the IT services sector, is anticipated to report minimal revenue growth for the January-March quarter. Analysts suggest that ongoing challenges in pivotal industries like manufacturing and energy are contributing to this stagnation. The company is set to unveil its fourth-quarter earnings on April 16, which is expected to provide valuable insights into the future of tech spending as we approach FY26.

Revenue Projections and Market Insights

According to Motilal Oswal Financial Services, Wipro’s revenue for the January-March period is projected to remain flat, hovering around the midpoint of its guidance range of -1% to +1%. The brokerage emphasizes that demand remains tepid across key sectors, particularly within the energy, manufacturing, and resources fields, especially in the Europe and APMEA (Asia Pacific, Middle East, and Africa) regions.

• BFSI and Healthcare Growth: On a more positive note, the banking, financial services, and insurance (BFSI) sector, alongside healthcare, might see a slight uptick. The BFSI vertical could benefit from heightened budget allocations and contributions from Wipro’s consulting subsidiary, Capco. Although healthcare growth is anticipated, it is expected to be slower than previous quarters.

Mixed Year-on-Year Growth Expectations

ICICI Securities forecasts a modest 0.8% increase in revenue in constant currency terms, driven mainly by strengths in the BFSI and healthcare domains. However, it notes that a significant European BFSI client is reducing its operations, which could impact overall performance.

When examining year-on-year data, the outlook appears slightly brighter, with several brokerages predicting a moderate revenue increase. HDFC Institutional Equities projects a 2.1% rise, estimating sales to reach Rs 22,672 crore, while InCred Equities and Nuvama predict growth rates of 2.5% and 1.3%, respectively.

Operating Margins and Cost Management

Operating margins are expected to remain stable, with no significant cost pressures anticipated this quarter. Motilal Oswal estimates margins will stay between 17.0% and 17.5%, thanks to the full absorption of wage hikes from the previous quarter. Meanwhile, InCred Equities and Nuvama expect EBIT margins to be around 17.5% and 17.6%, respectively. Kotak Institutional Equities points out that while a weaker rupee could help, limited operating leverage from stagnant revenues may neutralize these benefits.

Positive Developments Amidst Challenges

Despite the overall challenges, there are positive developments for Wipro, particularly in terms of deal acquisitions. Analysts are optimistic about recent large contract wins, including a notable £500 million deal with the Phoenix Group. Both ICICI Securities and Kotak Institutional Equities estimate the total contract value (TCV) for the quarter to be between $1.6 billion and $1.8 billion.

Cautious Outlook for Upcoming Quarters

Looking ahead, Wipro’s guidance for the June quarter is likely to be conservative, reflecting the ongoing global economic uncertainties. Analysts predict a constant currency growth range of -1% to +1% for FY26, mirroring trends from the fourth quarter.

Market observers will be closely monitoring management’s comments regarding client budgets, the demand for Capco’s services, and the impact of recent U.S. policy changes on spending patterns.

For more insights on Wipro and its market performance, stay tuned to our updates.