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Sustained discretionary spending weakness
View Risks →Wipro Limited — Q1 FY24
Wipro's Q1 FY24 results reflect a mixed performance amid a cautious macro environment.
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Wipro's Q1 FY24 results reflect a mixed performance amid a cautious macro environment. Revenue grew 6.1% YoY in rupee terms, within guided range, but constant currency growth was only 1.1% YoY. Operating margin held steady at 16%, up 112 bps YoY, driven by productivity improvements and cost management. Large deal bookings were robust at $1.2 billion TCV, the highest in eight quarters, with total bookings of $3.7 billion. However, discretionary spending weakness persisted, particularly in BFSI and high-tech. Management guided Q2 constant currency revenue growth of -2% to +1%, reflecting ongoing uncertainty. The company announced a $1 billion investment in AI over three years, primarily organic, and plans to train all 250,000 employees in AI. Key risk: sustained macro headwinds could delay discretionary spend recovery, impacting near-term revenue conversion of the strong deal pipeline.
विप्रो की पहली तिमाही के नतीजे मिले-जुले रहे। कंपनी की कमाई रुपये में पिछले साल से 6.1% बढ़ी, लेकिन असली बढ़त सिर्फ 1.1% रही। मुनाफा 16% पर स्थिर रहा, जो पिछले साल से 1.12% ज्यादा है। कंपनी को 1.2 अरब डॉलर के बड़े ऑर्डर मिले, जो पिछले 8 तिमाहियों में सबसे ज्यादा है। कुल ऑर्डर 3.7 अरब डॉलर के रहे। लेकिन बैंकिंग और टेक क्षेत्रों में खर्च कमजोर रहा। अगली तिमाही में कमाई में 2% गिरावट से 1% बढ़त का अनुमान है। कंपनी अगले 3 सालों में AI पर 1 अरब डॉलर खर्च करेगी और अपने सभी 2.5 लाख कर्मचारियों को AI में प्रशिक्षित करेगी। मुख्य जोखिम: बाजार में सुस्ती के कारण खर्च में सुधार में देरी हो सकती है।
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Read Transcript →Quarter Snapshot
Large Deal TCV
$1.2B
+9% YoY
Highest large deal bookings in eight quarters, with 10 deals over $30M TCV.
Total Bookings TCV
$3.7B
N/A
Total contract value of bookings for the quarter, indicating strong pipeline.
Attrition Rate
14%
-8pp YoY
Eight-quarter low attrition, reflecting improved employee engagement and retention.
$100M+ Accounts
21
+11 accounts in 2.5 years
Number of accounts generating over $100M revenue has more than doubled since Nov 2020.
What Changed vs Last Quarter
NEW
Q2 FY24 margins expected to be in similar range as recent quarters
Operating margins are expected to remain around 16% in Q2, similar to Q1, with no salary increases planned until Q3.
NEW
$1 billion investment in AI over three years
Wipro announced a $1B investment in AI, primarily organic, covering solutions, training, research, and M&A, funded through operational efficiencies.
NEW
Train all 250,000 employees in AI over next 12 months
Wipro plans to train its entire workforce in AI fundamentals and advanced topics, leveraging its DICE ID platform for credentialing.
UPDATED
Q2 FY24 constant currency revenue growth of -2% to +1% sequentially
Management expects Q2 revenue to decline 2% to grow 1% sequentially in constant currency, reflecting ongoing macro uncertainty.
DROPPED
Full-year FY24 revenue growth of 27%-28% YoY
Implied full-year growth of 27%-28% based on Q4 guidance.
DROPPED
Fresher hiring target of 30,000 for FY23
Planned to hire 30,000 freshers in FY23, up from 17,500 in FY22.
DROPPED
Attrition expected to moderate in Q4
Management expects attrition to stabilize and moderate in the next quarter.
NEW RISK
Sustained discretionary spending weakness
Clients continue to cut discretionary spends, impacting short-term revenue conversion of large deal wins.
NEW RISK
Revenue growth divergence vs peers
Despite strong deal wins, Wipro's revenue growth lags some peers, raising questions about portfolio mix and execution.
NEW RISK
AI investment may pressure margins if revenue growth disappoints
The $1B AI investment, though funded by efficiencies, could weigh on margins if expected revenue uplift is delayed.
NEW RISK
Consulting business (Capco, Rizing) facing headwinds
Consulting revenues are under pressure due to discretionary spend cuts, though management remains confident in strategic value.
RISK GONE
Elevated attrition and supply-side pressure
Attrition remains high, especially in high-growth areas like cloud and data, with 3-8 year experience band most affected.
RISK GONE
Wage inflation impacting margins
Multiple salary hikes and promotions in the last 12 months could pressure margins if not offset by productivity gains.
RISK GONE
Integration risk from multiple acquisitions
Rapid M&A activity may pose integration challenges, though management claims strong PMI processes.
RISK GONE
COVID-19 Omicron disruption
New wave of COVID-19 led to office closures and could impact employee productivity and client engagements.
Fast read
Guidance and risk preview
Management expects Q2 revenue to decline 2% to grow 1% sequentially in constant currency, reflecting ongoing macro uncertainty.
Clients continue to cut discretionary spends, impacting short-term revenue conversion of large deal wins.
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