By Sai Ishwarbharath B, Abhirami G and Haripriya Suresh
BENGALURU, Oct 15 (Reuters) – Wipro’s quarterly deal bookings plunged to an almost four-year low, deepening worries that India’s fourth-largest IT firm is ceding market share to rivals.
Thursday’s news dragged down the company’s US-listed shares 4.5% in premarket trading and highlighted CEO Srinivas Pallia’s struggle to revive growth more than two years after taking the helm.
“Wipro is still not out of the woods, and this will persist,” Indsec Securities analyst Rishubh Vasa said, highlighting how the firm’s ability to win new business has weakened over the past two to three quarters. “Their order book is in stress.”
AI has disrupted India’s $315 billion IT industry, forcing firms to revamp business models and offer deep discounts to win deals. Wipro, meanwhile, has also struggled with top-level exits and acquisition-related challenges.
The company’s total contract value bookings plunged to $2.6 billion in the quarter ended September 30 from $4.7 billion a year earlier.
Underscoring Wipro’s need to bag large deals, Pareekh Jain, founder of IT research firm EIIR Trend, said its “dual focus on margin and revenue is not working.” While Cognizant has been gaining ground with aggressive pricing and Tech Mahindra has revived margins after exiting low-yield accounts, Wipro is still trailing the pack, Jain added.
DEMAND WOES
Wipro forecast third-quarter revenue of $2.57 billion to $2.63 billion, implying a roughly 1.5% decline to 0.5% growth. That was modestly ahead of analysts’ expectations for revenue to decline up to 2% or remain flat.
Seasonal furloughs would weigh on third-quarter performance, Pallia said.
Consolidated second-quarter revenue rose 9.1% to 247.53 billion rupees ($2.60 billion), edging past analysts’ average estimate of 246.27 billion rupees, according to LSEG data.
Net profit, hurt by higher wage and subcontracting costs, fell 1.5% to 32.01 billion rupees, below expectations of 33.69 billion rupees.
($1 = 95.0550 Indian rupees)
(Reporting by Sai Ishwarbharath B, Abhirami G and Haripriya Suresh; Editing by Jochelle Mendonca, Dhanya Skariachan and Joyjeet Das)
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