Wipro Q2 Results Preview: Steady Margins Expected Amidst Deal Ramps and Cost Headwinds
Wipro, one of India’s leading IT services companies, is set to announce its Q2 results, and analysts expect modest sequential revenue growth for the July–September quarter. The company’s margins are likely to remain steady, as deal ramp-ups and cost factors offset each other. In this article, we will delve into the expected performance of Wipro, the key factors that will influence its results, and the outlook for the IT sector as a whole.
Expected Performance
According to the Bloomberg consensus, Wipro’s revenue is expected to be around Rs 22,680 crore, up 2% from Rs 22,135 crore in the previous quarter. The company’s profit is expected to be around Rs 3,279 crore, down 2% from Rs 3,330 crore in the previous quarter. Ebitda is expected to rise 5% to Rs 4,457 crore, with the margin near 19.65% versus 19.14% in the prior quarter.
Analysts will be closely watching the company’s guidance for the next quarter, as well as the impact of large deal ramps on near-term margin. The quarter will test how recently won large deals affect operating profit as ramp costs feed through. Market attention will centre on Q3 guidance, consulting and Europe demand, and commentary on discretionary spend and any cost headwinds linked to deal ramps.
Analysts’ Expectations
Here’s what some of the top analysts are expecting from Wipro’s Q2 results:
- Goldman Sachs: Q2 revenue growth expected above the mid-point of Wipro’s -1% to +1% guidance. Sees Q3 FY26 guidance at 0% to +2% quarter-on-quarter (Goldman estimate 1.5%). Margins likely to improve sequentially due to the absence of Q1 restructuring costs. Headcount expected to stay flat quarter-on-quarter.
- Jefferies: IT services revenue expected flat quarter-on-quarter in constant currency, near the midpoint of guidance. Ebit margin may decline by about 20 basis points due to ramp-up costs. Expects Q3 guidance of 0%–2% quarter-on-quarter as mega deal ramps offset furloughs. Key focus: Europe demand, consulting performance, deal bookings, AI adoption, H-1B visa fee impact, and capital allocation.
- InCred: Constant currency revenue growth seen at 0.1%, led by financial services, partly offset by softness in consumer and healthcare. Services Ebit margin likely flat as cost optimisation and vendor consolidation balance headwinds. Watch for Q3 guidance, large deal wins, and vertical performance.
- Nomura: Revenue expected to grow 0.2% quarter-on-quarter in constant currency, within guided range. Ebit margin may decline by about 60 basis points due to upfront ramp-up costs of large deals. Focus areas: consulting (particularly in BFSI), deal pipeline, and client discretionary spending.
- HSBC: Constant currency growth expected at the mid-point of guidance (-1% to +1%), with a 20 basis point currency cushion. Ebit margin seen improving by around 40 basis points, aided by rupee depreciation. Expects stronger Q3 guidance of 1%–2% quarter-on-quarter; focus on Europe and deal ramp progress.
Outlook for the IT Sector
The IT sector has been a major driver of growth for the Indian economy, and companies like Wipro, Infosys, and TCS have been at the forefront of this growth. However, the sector is facing several challenges, including rising competition, increasing costs, and a slowdown in global demand.
Despite these challenges, the IT sector is expected to continue growing, driven by the increasing demand for digital transformation, cloud computing, and artificial intelligence. Companies that are able to adapt to these changes and invest in new technologies are likely to be the winners in the long term.
Investment Strategy
For investors, the IT sector offers several opportunities for growth, but it is essential to be cautious and do thorough research before making any investment decisions. Here are a few tips:
- Long-term approach: The IT sector is known for its volatility, and it is essential to have a long-term approach when investing in this sector.
- Diversification: Diversify your portfolio by investing in a mix of large-cap, mid-cap, and small-cap companies.
- Research: Do thorough research on the company’s financials, management, and industry trends before making any investment decisions.
- Stay informed: Stay informed about the latest news and trends in the IT sector, and be prepared to adjust your investment strategy accordingly.
In conclusion, Wipro’s Q2 results are expected to be modest, with steady margins and a focus on deal ramps and cost headwinds. The IT sector is facing several challenges, but it is expected to continue growing, driven by the increasing demand for digital transformation, cloud computing, and artificial intelligence. Investors should be cautious and do thorough research before making any investment decisions, and consider a long-term approach, diversification, research, and staying informed about the latest news and trends in the sector. You can also check our website for more information on stock market news India and Indian stock market tips.
