Wipro shares hit two-month high as revenue beat offsets weak deal bookings

Wipro's shares reached a two-month peak on Friday, driven by better-than-anticipated revenue and higher operating margins, despite a decline in profit and a significant drop in deal bookings. The company's stock jumped 6.2% to ₹184.80, its highest level since August 14, while the Nifty 50 index increased by 0.4% to 23,092.45. This positive movement in Wipro's shares came as Asian equities rebounded, with technology stocks bouncing back following a recent sell-off triggered by AI-related concerns.

For the quarter ended September 30, Wipro reported revenue of ₹24,753 crore, a 9.1% increase year on year, slightly below Bloomberg's estimate of ₹24,773 crore. However, the company's profit attributable fell 1.4% to ₹3,201 crore, falling short of the estimated ₹3,310 crore by 3.3%. Earnings per share, however, rose 4.2% to ₹3.23.

In the IT services segment, which makes up the majority of Wipro's business, revenue grew 0.3% year on year to $2.61 billion, remaining flat on a constant-currency basis. Sequentially, constant-currency revenue slightly increased by 0.6%. Yet, total bookings declined by 22.9% sequentially in constant-currency terms, reaching $2.60 billion, while large-deal bookings dropped a whopping 58.6% to $674 million.

This sharp decline has raised doubts about the speed at which new contracts will convert into revenue. Despite these headwinds, Wipro's CEO, Srini Pallia, remains optimistic, stating that the company's strategic investments are starting to bear fruit, helping secure new clients and expand existing relationships. He also highlighted AI as a long-term growth driver for the technology and business transformation sectors.

For the upcoming December quarter, Wipro anticipates IT services revenue between $2.57 billion and $2.63 billion, indicating a sequential change of between 1.5% decline and 0.5% growth in constant-currency terms.