Wipro Q2 FY 24: Analysts predict decline in revenue and slowdown in hiring

Indian IT services company Wipro is set to announce its Q2 FY 2023-24 results on Wednesday. The IT company’s results will be in focus as major IT players like TCS, Infosys, and HCLTech have announced tepid results for the September-ended quarter. Analysts expect Wipro's sequential revenue to decline but utilization to improve in Q2 FY 24.

Revenue growth

Brokerages expect Wipro’s revenue to decline in Q2. This is due to the macroeconomic slowdown and cut backs on discretionary IT spending by clients.

“Another quarter of sequential decline, we forecast revenue to decline 1 per cent CC QoQ in Q2, closer to the lower end of the company’s guided range,” analysts at IIFL Securities noted. 

Similar views were shared by brokerage house Nirmal Bang.  Their report also expects the company to face cross currency headwinds of around 65 basis points in Q2 FY 24.

“We estimate (-)1 per cent CC QoQ revenue growth in Q2 FY24 as against (-)2 per cent to 1 per cent CC growth guidance. There will be a cross-currency headwind of 65 bps. We expect the company to give (-)2 per cent to 1 pr cent QoQ growth guidance for 3QFY24,” analysts at Nirmal Bang said in their report. CC stands for constant currency.

Deal wins

Wipro did not announce any large deals in Q2 FY 24,  but analysts expect the Total Contract Value (TCV),the lifetime value of a contract, to remain above $3 billion.

“In terms of TCV, Wipro has been delivering $3 billion+ for the last three consecutive quarters and we expect TCV to not fall below $3 billion, although there have not been any large deal announcements this quarter,” analysts at Nirmal Bang said.

Analysts at KR Chowksey expect the company to announce a robus quantum and size of deal wins in Q2. 

“Despite the macro-overhang, management expects robust deal wins going ahead owing to strong execution capabilities and continue investment from their clients for their transformation,” their report read.

Employee hiring and utilisation

Due to the tepid growth numbers, analysts expect Wipro to slow down its hiring plans. The company had not set a hiring target for FY 2023-24 at the beginning of the year. Attrition is also expected to moderate. 

Moderation in attrition along with cut backs on hiring is expected to improve the utilization and reduce bench size, analysts explained.

“Tailwinds to margins include improved utilization, management of fixed costs and greater use of automation,” KR Chowksey’s report noted.

Nirmal Bang added, “Increase in utilization rates, operating efficiency kicking in and reduction in fixed costs.”