Wipro Q1 Results: Margins down to lowest in nearly four years; Deal wins down 2.5%

Bengaluru-based IT services provider Wipro Ltd. expects constant currency growth for the September quarter to be between -1.5% to 0.5% on a sequential basis. A CNBC-TV18 poll had projected this guidance to be between a negative 2% to positive 2%.

For the June quarter, Wipro reported Constant Currency revenue growth of -1.2% during the quarter, which is lower than its peers TCS, which grew 0.4% in constant currency terms, while HCLTech's constant currency growth was a negative 0.5%.

In US Dollar terms, Wipro delivered IT services revenue of $2,614.5 million, in-line with the CNBC-TV18 poll figure of $2,614 million. That implies a drop of 1.4% on a sequential basis and 1% higher on a year-on-year basis.

Revenue in rupee terms stood at ₹24,453 crore, marginally lower than the CNBC-TV18 poll estimate of ₹24,600 crore. Wipro had reported a topline of ₹24,017 crore in the March quarter.

EBIT margins for the quarter stood at 16% from 17.3% in the previous quarter. A CNBC-TV18 poll had pegged the figure to be 16.9%. This is the lowest level for Wipro's EBIT margins in the last 15 quarters.

Margins were expected to be narrowed due to a two-month impact of wage hikes, negative operating leverage, and productivity pass-through in the recent renewals.

Wipro's management has expressed a desire historically to return to the 17% to 17.5% margin band, although Morgan Stanley warns that incremental investments could keep margins below this range in the near-term.

Morgan Stanley has also warned of Wipro's organic revenue declining in financial year 2027 and that it expects the underperformance to continue versus its peers in financial year 2028 as well.

"We think Wipro could face margin challenges – most of the traditional levers have already been used up and incremental business from here should be coming at lower margins, given both macro and technology-led challenges. We think Wipro's valuation could go to a steep discount relative to larger peers," the brokerage said in its note earlier.

Shares of Wipro ended 1.8% higher ahead of the earnings announcement on Thursday at ₹178. The stock is down 33% so far this year.