Mumbai: Wipro Ltd. is expected to post a subdued performance for the first quarter of FY27, with analysts forecasting modest revenue growth but lower operating margins and profit due to salary hikes, weak discretionary spending and slower conversion of large deals.
While the IT major is likely to remain within its own revenue guidance for the June quarter, investors will be more focused on management commentary around demand trends, artificial intelligence (AI) adoption, large deal execution and the company’s outlook for the second quarter.
The results come at a time when India’s information technology sector continues to navigate macroeconomic uncertainty, cautious client spending and the increasing influence of AI on technology budgets. Although enterprises continue to invest in digital transformation, discretionary projects remain under pressure, delaying revenue conversion for several IT service providers.
Bloomberg estimates point to modest revenue growth
According to Bloomberg consensus estimates, Wipro is expected to report consolidated revenue of Rs 24,730 crore, up around 2% quarter-on-quarter from Rs 24,236 crore.
However, profitability is expected to remain under pressure.
Analysts estimate:
- Revenue: Rs 24,730 crore (up 2% QoQ)
- EBIT: Rs 4,113 crore (down 1% QoQ)
- EBIT margin: 16.63%, compared with 17.18% in the previous quarter
- Net profit: Rs 3,466 crore (down 1% QoQ)
In constant currency terms, Bloomberg estimates revenue growth of 1.62% year-on-year and 1.33% quarter-on-quarter.
Employee attrition is expected to remain relatively stable at 14.86%, while total headcount is estimated at 2,49,422 employees, with net additions of nearly 18,000 employees.
Salary hikes expected to weigh on margins
A key concern for investors this quarter will be Wipro’s operating margins.
Most brokerages expect margins to contract as annual salary hikes, lower operating leverage and costs associated with ramping up large deals offset the benefits of rupee depreciation.
Several analysts estimate margin pressure ranging between 25 basis points and 130 basis points, depending on assumptions around acquisitions and project execution.
The company has also been integrating recent acquisitions, which are expected to support long-term growth but could temporarily increase operating expenses.
Weak discretionary spending remains a challenge
Brokerages believe client spending continues to remain cautious, particularly for discretionary technology projects.
Although demand for cloud services, cybersecurity and AI solutions remains healthy, customers are still delaying spending decisions in several verticals amid global economic uncertainty.
As a result, analysts expect Wipro’s IT services business to perform near the lower end of the company’s earlier guidance range.
Another key challenge remains the slower conversion of large deal wins into revenue, which has affected growth over recent quarters.
What major brokerages expect
DAM Capital
DAM Capital expects Wipro’s revenue to remain within the company’s guided range of 0% to -2% quarter-on-quarter in constant currency.
Excluding contributions from Olam and Alpha Net Consulting, the brokerage expects organic revenue to decline around 2.2%.
It believes deal-to-revenue conversion remains weak and expects the trend to continue into the next quarter.
The brokerage forecasts margins to decline by around 70 basis points, primarily due to weaker operating leverage and large deal ramp-up costs.
Jefferies
Jefferies expects IT services revenue to decline 1.7% quarter-on-quarter in constant currency.
The brokerage expects about 65 basis points of inorganic growth from the Mindsprint acquisition.
It forecasts EBIT margins to decline around 25 basis points because of wage hikes and acquisition-related expenses.
Jefferies expects Wipro’s Q2 FY27 revenue guidance to be in the range of -1% to +1% in constant currency.
Citi
Citi estimates IT services revenue will decline 1.4% quarter-on-quarter in constant currency.
The brokerage expects wage hikes to reduce EBIT margins by approximately 40 basis points.
Citi noted that the Mindsprint acquisition has not yet been included in its estimates and could add 65–70 basis points to quarterly revenue if completed during the period.
IIFL Capital
IIFL Capital expects IT services revenue to decline 1.3% quarter-on-quarter in constant currency and around 2.3% organically.
It projects one of the sharpest margin declines among brokerages, estimating a contraction of about 130 basis points due to lower revenue, salary revisions and deal transition costs.
Nuvama
Nuvama forecasts a 1.5% sequential decline in constant currency revenue.
The brokerage expects approximately 0.6% revenue growth from the Mindsprint acquisition.
Margins are expected to decline around 130 basis points because of deal ramp-ups and two months of salary hikes.
It also expects Q2 revenue guidance of -1% to +1% in constant currency.
CLSA
CLSA believes overall demand conditions remain largely unchanged.
According to the brokerage, competitive intensity continues to remain elevated as companies increasingly compete on pricing, AI capabilities and execution.
It also noted that the completion of the Alpha Net acquisition has been delayed, postponing its expected revenue contribution.
AI commentary likely to dominate earnings call
Artificial intelligence is expected to be one of the biggest discussion points during Wipro’s earnings call.
Investors will closely track management’s comments on:
- Enterprise AI spending
- Generative AI opportunities
- AI-led productivity improvements
- Client demand trends
- Large deal pipeline
- Deal conversion timelines
- Margin recovery roadmap
As AI adoption accelerates across industries, investors are keen to understand whether new AI-led opportunities are translating into measurable revenue growth for Indian IT companies.
Outlook
Although Wipro is expected to report another subdued quarter, the company’s forward-looking commentary is likely to carry greater significance than the headline numbers.
With global enterprises remaining cautious on discretionary spending while increasing investments in AI and digital transformation, investors will closely monitor whether Wipro can improve deal execution, restore margin momentum and return to sustainable growth over the coming quarters.