By Haripriya Suresh and Sai Ishwarbharath B
BENGALURU, July 16 (Reuters) – Wipro missed quarterly earnings estimates and forecast a weak recovery, raising fresh concerns about the Indian IT firm losing ground to rivals as demand in its key Americas market softens.
After Thursday’s news, its U.S.-listed shares fell as much as 2.2% in pre-market trading and underscored the challenge CEO Srinivas Pallia faces in reviving growth at India’s No. 4 software-services exporter more than two years after taking charge.
“Wipro is lagging its peers,” Centrum Broking analyst Piyush Pandey said. “It’s possible that the type of legacy deals that Wipro has, is not able to generate sustaining growth.”
The Bengaluru-based company’s troubles are a sign of the mounting pressure on India’s $315 billion IT sector, where cautious clients are cutting non-essential spending while using AI to squeeze greater efficiency.
Rivals Tata Consultancy Services, HCLTech and Tech Mahindra beat quarterly revenue expectations, helped by a depreciating rupee and strength in varying segments.
Wipro forecast second-quarter revenue of $2.57 billion to $2.63 billion, a 1.5% decline to 0.5% growth from the quarter ended June. Analysts had expected guidance of between a 1% decline and a 1% increase.
Revenue rose 10.6% year-over-year to 244.79 billion rupees ($2.54 billion) in the first quarter, missing analysts’ average estimate of 247.76 billion rupees, according to data compiled by LSEG. Net profit edged up 0.6% to 33.52 billion rupees, underwhelming estimates of 34.42 billion rupees.
Total deal wins for Wipro fell to $3.37 billion from $5 billion a year earlier.
The Americas market declined due to client-specific issues and tech spending cuts in the healthcare segment, CEO Pallia said, without sharing further details.
Wipro’s operating margin slipped to 16% from 17.3% in both the preceding quarter and a year earlier, as salary hikes and the ramp-up of several large deals weighed.
The company warned of “near-term margin volatility” as it invests in employees and strategic growth areas amid a rapidly evolving technology landscape, CFO Aparna Iyer said.
($1 = 96.3450 Indian rupees)
(Reporting by Haripriya Suresh and Sai Ishwarbharath B in Bengaluru; Editing by Sonia Cheema, Dhanya Skariachan and Mrigank Dhaniwala)
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