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Wipro Q4 2025 Earnings Preview: Navigating Margins, Mega Deals, and a Cautious Outlook

Julian WestTuesday, Apr 15, 2025 1:58 pm ET

39min read

As Wipro prepares to report its Q4 FY25 results on April 16, investors are bracing for a mixed bag of performance metrics amid a challenging macroeconomic backdrop. With revenue growth expected to hover near stagnation and net profit growth constrained by margin pressures, the spotlight will be on the IT giant’s ability to navigate discretionary spending headwinds, leverage its Phoenix mega-deal, and stabilize its underperforming verticals.

Revenue: A Marginal Q-o-Q Rise, But YoY Struggles Persist

Analysts project Wipro’s Q4 revenue to edge up 1.49% sequentially to ₹22,651.80 crore, though most estimates suggest a 2% YoY growth—a far cry from the double-digit expansions seen in previous years. Constant currency (CC) terms paint an even bleaker picture, with Motilal Oswal forecasting a -0.4% CC decline, reflecting soft demand in key geographies like Europe and regions such as APMEA.

The Phoenix deal—a $1.6–1.8 billion contract with a European client—is a critical wildcard. While it could boost deal pipeline visibility, its revenue recognition will likely start in FY26. Analysts like Kotak Securities argue that Q4 revenue may land at the lower end of Wipro’s -1% to +1% CC guidance, with sluggishness in energy, manufacturing, and BFSI sectors.

Net Profit: Margin Pressures Test Resilience

Despite revenue headwinds, net profit is expected to grow 17.07% YoY to ₹3,318.60 crore. However, sequential trends are less rosy: JM Financial’s higher estimate of ₹3,484.9 crore contrasts with Elara Capital’s gloomier projection of a 2.2% Q-o-Q drop to ₹3,280.3 crore. The disconnect stems from margin dynamics.

Analysts anticipate 12 bps of sequential EBIT margin contraction due to elevated costs and rupee depreciation. While Nuvama and Motilal Oswal see stability at 17–17.5% margins, others like Elara warn of cost pressures eroding profitability. The rupee’s recent volatility adds another layer of uncertainty, as a weaker currency can both inflate costs and boost dollar revenue conversions.

Key Focus Areas: Phoenix Deal, Verticals, and Discretionary Spending

The Phoenix Deal’s Importance: With the contract’s Total Contract Value (TCV) nearing $1.8 billion, its execution will be pivotal for FY26 revenue guidance. Investors will scrutinize management commentary on ramp-up timelines and whether it offsets weakness in legacy verticals.
Geographic Weakness: Europe and APMEA regions, which account for ~50% of Wipro’s revenue, remain problematic. Weakness in energy and manufacturing sectors—where Wipro has significant exposure—could weigh on performance.
BFSI Sector Watch: Analysts at JM Financial highlight cautious spending in BFSI, a critical vertical for Wipro. Any signs of stabilization here could buoy investor sentiment.

Brokerage Outlook: Caution Dominates

The brokerage consensus is cautiously bearish. Motilal Oswal and Elara have both assigned “Sell” ratings, citing valuation risks and margin concerns. Meanwhile, Kotak and Nuvama offer more tempered views, with Nuvama expecting -0.5% CC revenue growth in Q1 FY26.

Stock Performance: A Pre-Earnings Rally, But Uncertainty Lingers

Wipro’s shares rose 1.79% to ₹244.10 ahead of the results, driven by optimism around the Phoenix deal and cost-cutting measures. However, the stock remains down ~15% YTD, reflecting broader IT sector jitters.

Conclusion: A Delicate Balance Between Hope and Reality

Wipro’s Q4 results will hinge on whether it can mitigate margin erosion, stabilize its lagging verticals, and position the Phoenix deal as a growth catalyst. While the 2% YoY revenue growth and 17%+ EBIT margins (if achieved) would mark resilience, the path to FY26 remains fraught with risks.

Analysts’ Sell ratings and muted FY26 guidance expectations (~-1% to +1% CC growth) suggest skepticism around near-term recovery. However, the Phoenix deal’s TCV could provide a long-term tailwind—if executed effectively. For now, investors should remain cautious: Wipro’s stock trades at a 16x forward P/E, slightly below its five-year average, but macroeconomic clouds and sector-wide demand concerns leave limited upside catalysts in the near term.

The verdict? Wipro’s results may offer a “muddle-through” narrative rather than a breakout story. Until discretionary spending picks up and vertical weaknesses reverse, the focus will stay on execution—both in the Phoenix deal and cost management—to justify a bullish stance.

In the end, April 16’s earnings call will be a litmus test for management’s ability to steer Wipro through choppy waters—and investors will be listening closely for signs of calmer seas ahead.

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