Wipro's Q4 FY2025 Earnings: Revenue Growth Masks Underlying Challenges Amid Margin Resilience

Wipro Limited’s fourth-quarter fiscal 2025 earnings revealed a nuanced performance, with nominal revenue growth overshadowed by persistent macroeconomic headwinds and strategic shifts toward higher-margin AI-driven solutions. While the IT services giant reported a 1.3% year-on-year revenue increase, the results underscored a widening divergence between top-line stagnation and bottom-line resilience, fueled by aggressive cost discipline.

Revenue Performance: Growth, but Not Without Caveats

Wipro’s Q4 FY2025 gross revenue rose to ₹22,504.20 crore ($2.63 billion), marking 0.8% sequential growth and 1.3% YoY expansion. However, IT Services revenue—a critical driver—declined 1.2% QoQ and 2.3% YoY in reported terms, with constant currency figures showing an even steeper 1.2% YoY contraction. This miss against the company’s guidance (0-1% constant currency growth) reflects softening demand in key sectors like BFSI and healthcare, which saw QoQ declines of 0.5% and 3.1%, respectively.

The IT Products segment, meanwhile, struggled, reporting a ₹20 crore annual loss, underscoring the challenges of diversifying beyond traditional services.

Profitability: Margin Expansion Through Cost Control

Despite revenue headwinds, Wipro’s net profit jumped 25.9% YoY to ₹3,569.60 crore, driven by a 17.5% EBIT margin—up 1.1% YoY. CFO Aparna Iyer attributed this to “disciplined cost management,” including voluntary attrition stabilization (15.0% trailing 12 months) and workforce optimization. The company’s operating cash flow, however, fell 28.2% YoY to ₹3,750 crore, highlighting liquidity pressures despite strong net income.

Strategic Momentum: Large Deals and AI Investments

The quarter’s standout was its large deal pipeline, with Q4 bookings surging 48.5% YoY in constant currency to $1.76 billion. The $1.8 billion Phoenix Group deal—a 10-year IT transformation project—marked Wipro’s largest ever, signaling its ability to secure long-term contracts in a cautious market. Total FY2025 large deal bookings hit $5.4 billion, up 17.5% YoY, offering hope for future revenue stability.

Wipro’s push into AI also gained traction, with 10,000 new hires focused on upskilling and AI integration. The company highlighted “AI-first” client engagements, such as its healthcare solution for payers, aiming to differentiate itself in a commoditized services market.

Risks and Challenges: Macro Uncertainty and Competitive Pressures

CEO Srini Pallia warned of lingering macroeconomic risks, citing “cautious client spending” amid U.S.-China trade tensions and sector-specific slowdowns. The Q1 FY2026 guidance forecasts a 3.5% to 1.5% sequential decline in IT Services revenue, reflecting delayed client decisions.

Analysts remain divided. JM Financial and Goldman Sachs downgraded the stock to “Sell,” citing margin contraction risks and weak demand, while Emkay Global remained cautiously optimistic. The stock’s 18% year-to-date decline reflects investor skepticism, though it’s up 10% over 12 months.

Conclusion: A Mixed Picture with Long-Term Potential

Wipro’s Q4 results paint a contradictory narrative: margin strength and strategic wins contrast with revenue stagnation and macroeconomic risks. The company’s large deal pipeline and AI investments position it for future growth, but near-term hurdles—including attrition, weak sector demand, and tariff-driven client caution—loom large.

Investors should weigh Wipro’s disciplined cost structure and $5.4 billion in large deals against its guidance for a Q1 revenue drop and tepid sector momentum. While the stock’s valuation at 15x forward P/E appears reasonable, the path to sustained revenue growth hinges on executing its AI strategy and navigating macroeconomic uncertainty. For now, Wipro remains a “hold”—a company with resilience but still searching for the next growth inflection point.