Wipro Limited, one of India’s leading IT service providers, announced its Q2 FY25 financial results, reporting a significant increase in profit but a slight decline in revenue. In this quarter, the company’s profit surged by 21%, reaching ₹3,209 crore compared to ₹2,646 crore in the same quarter last year. However, revenue from operations saw a slight dip of 0.95% year-on-year (YoY), falling to ₹22,301.6 crore from ₹22,515.9 crore in the corresponding period of the previous fiscal year.
Profit Growth in Q2 FY25
Wipro experienced a robust growth in profit for the second quarter of FY25, as consolidated net profit increased by 21.26% YoY. The profit for the September quarter reached ₹3,208.8 crore, marking a strong performance compared to ₹2,646.3 crore in the year-ago period. This surge in profit reflects Wipro’s focus on optimizing operations and capitalizing on strategic deals in key sectors.
Revenue Decline Despite Strong Execution
Despite the impressive profit growth, Wipro’s revenue from operations declined slightly by 0.95% YoY, with the company reporting revenue of ₹22,301.6 crore, down from ₹22,515.9 crore in the same period last fiscal year. The dip in revenue came amid challenging market conditions, but Wipro’s management remained optimistic about future growth prospects, particularly in key business segments such as Banking, Financial Services, and Insurance (BFSI), as well as Technology, Communications, and Consumer sectors.
Bonus Shares Announcement
In a move to reward its shareholders, Wipro’s Board recommended issuing bonus shares in the ratio of 1:1, meaning shareholders will receive one equity share for every share they currently hold. This includes a stock dividend for ADS (American Depository Shares) holders, subject to shareholder approval. The record date for determining eligible shareholders for the bonus issue will be announced at a later time.
Strong Deal Bookings and Market Growth
Wipro’s CEO and Managing Director, Srini Pallia, highlighted the company’s achievements in Q2, stating that strong execution allowed the company to meet expectations for revenue growth, bookings, and margins. He emphasized that large deal bookings exceeded $1 billion once again, with three out of four major markets showing growth. In addition to BFSI, significant growth was recorded in the Technology, Communications, and Consumer sectors.
“Our strategic focus on expanding top accounts and large deal wins has been crucial for driving this growth,” said Pallia. “Capco, our consultancy subsidiary, maintained its momentum for another consecutive quarter, further supporting Wipro’s overall performance.”
Operational Improvements and Margin Expansion
Wipro also reported improvements in operational efficiency, which contributed to the expansion of margins by 35 basis points. The company’s earnings per share (EPS) grew by 6.8% quarter-on-quarter (QoQ), reflecting the positive impact of these operational enhancements. Wipro’s CFO, Aparna Iyer, added that the firm’s operating cash flow was strong at 132.3% of net income, demonstrating robust financial health.
Voluntary Attrition Rate Declines
The IT giant reported a decline in its voluntary attrition rate, which stood at 14.5% on a trailing 12-month basis for Q2 FY25. This marks an improvement, indicating better employee retention compared to previous quarters. Reducing attrition is crucial for IT firms like Wipro as they seek to retain talent in a competitive industry.
Outlook for Q3 FY25
Looking ahead, Wipro provided guidance for the December 2024 quarter. The company expects revenue from its IT services business to be in the range of $2,607 million to $2,660 million. This translates to a sequential guidance of -2.0% to 0.0% in constant currency terms, indicating a cautious yet stable outlook for the upcoming quarter.
Stock Market Performance
Wipro’s quarterly results were released shortly after the market closed. The company’s stock settled 0.65% lower at ₹528.80 on the day of the announcement. The slight decline in share price reflects investor caution, likely due to the revenue dip despite the strong profit growth and positive outlook for the future.
Conclusion
In summary, Wipro’s Q2 FY25 results paint a mixed picture, with a strong 21% jump in profit offset by a slight decline in revenue. The company’s focus on operational efficiency, large deal bookings, and expansion in key markets has helped drive profitability, while its decision to issue bonus shares aims to reward shareholders. Despite the modest revenue drop, Wipro remains well-positioned for future growth, with an optimistic outlook for the next quarter. The firm’s efforts to retain talent and expand margins indicate a commitment to long-term sustainability in a competitive IT industry.
