Wipro Ltd.

Overview Key strengths Key risks Healthy deal wins, strategic investments, and a large recurring revenue base provide good earnings visibility. Smaller scale and lower profit margins than those of peers at a higher rating level. Cost advantage on offshore resources and global service delivery support healthy margins. Limited visibility of revenue growth amid macroeconomic headwinds and reduced information technology (IT) spending. Strong operating cash flows with low capital spending requirements provide sufficient headroom for discretionary spending. Our outlook for the global IT services industry remains weak for the next year. This is on the back of weak macroeconomic conditions and ongoing geopolitical uncertainties. These have resulted in companies cutting budgets amid inflationary concerns. As a result, we expect Wipro's revenue

...Discretionary IT spending will remain soft over the next 12-18 months. Our outlook for the global IT services industry remains weak for the next year. This is on the back of weak macroeconomic conditions and ongoing geopolitical uncertainties. These have resulted in companies cutting budgets amid inflationary concerns. As a result, we expect Wipro's revenue to fall by 1%-2% in fiscal 2024 (year ended March 31). This compares with our earlier estimate of a 3%-4% growth over the period. That said, lower attrition will translate into a 2% decline in employee cost. The company's EBITDA margin will therefore likely remain stable at 19%-20%, as was evident during the first half of fiscal 2025....

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