IT major Wipro is set to announce its financial results for Q3FY25 on January 17. While the company witnessed sequential revenue growth in the second quarter, analysts predict yet another revenue decline or minimal growth in the third quarter (Q3). Here are some other key considerations:

Revenue growth

In Q2, revenue from operations stood at ₹22,302 crore, registering marginal growth on a sequential basis. A poll of brokerages expects a q-o-q growth of -1.3 to 0.3 per cent, with the company benefitting from deal ramp-ups, which will be partly offset by furlough seasonality. Analysts expect revenue in Q3FY25 to be in the range of ₹22,466 – ₹22,781 crore, with an earlier-than-expected recovery in revenue growth due to improving macro headwinds.

Margins and guidance

In Q2, Wipro’s earnings before interest and tax (EBIT) margins were 16.8 per cent. Brokerages expect a drop to 16.4 per cent this quarter.

An Emkay Global Financial Services report stated, “We expect 1.3 per cent sequential USD revenue decline in the IT services segment, after factoring in 80bps cross-currency headwinds. We expect IT Services’ EBIT margins to decline by 30bps sequentially due to an incremental two-month impact of salary hikes. Overall EBITM to decline almost similarly q-o-q.”

While the company had guided a -2 per cent to 0 per cent, BNP Paribas expects it to guide for quarterly CC revenue growth of 0-2 per cent q-q for Q3FY25. Alongside, Wipro might guide to -0.5 to +1.5 per cent growth for Q4FY25.

Deals and conversions

In Q2FY25, the total bookings stood at $3.56 billion, marginally higher than the $3.3 billion signed last quarter. Large deal bookings were at $1.5 billion, an increase of 28.8 per cent on-quarter.

“The company’s strategy of exiting smaller accounts, while well-intentioned, appears to be mistimed given the macroeconomic pressures, in our view. We see risks to Wipro’s earnings growth and valuation,” the BNP Paribas report said.

Key monitorables for the quarter would be deal intake or pipeline, the trends seen in leakage in the base business, an update on ramp-ups of the recently won large deals, change in deal pipeline composition in terms of cost takeouts vs discretionary or transformational spends, and company’s ability to participate effectively to retain/capture wallet share, brokerages suggested.