Wipro Q4 results review – A weak start to FY24

Wipro Ltd.’s guidance of 3% to 1% QoQ decline in Q1 FY24 revenue in constant currency terms is a very weak start to FY24, something not anticipated by the street.

What is interesting however is that the Wipro management seems to be realistic and has indicated that a revenue pick-up in later quarters of FY24 is entirely dependent on improvement in macro conditions.

It is of the view that if macro conditions stay where they are currently (showing resilience due to a strong U.S. consumer), revenue growth will come back sooner post Q1 FY24.

However, our view remains that the worst on the macro front is ahead of us and not behind us, and hence we think a H2 FY24 recovery in growth seems quite unlikely. Q4 FY23 QoQ constant currency IT services revenue decline of 0.6% was along expected lines.

The Ebit margin was flat QoQ in IT Services and fell below our expectation. Margin guidance for FY24 is that it would stay ~16-16.5%. Banking,financial services and insurance and technology have been two verticals which seem to be causing the growth pain.

Wipro has clocked record total contract value for the second consecutive quarter (up 28% YoY in Q4 FY23 with large deal bookings up 115%). The revenue growth guidance is weak in the context of these bookings. Bloomberg