Wipro Ltd (WIPRO) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day and welcome to Wipro Limited Q2 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded and the duration for today's call will be for 45 minutes. I now hand the conference over to Mr. Abhishek Jain, Vice President, Corporate Treasurer and Head of Investor Relations. Thank you and over to you, sir.
Abhishek Jain (Wipro Ltd): Thank you, Yashashree. Good evening. A warm welcome to our Q2 FY '27 earnings call. We'll begin this call with the business highlights and overview by Srini Pallia, our Chief Executive Officer and Managing Director, followed by updates on financial overview by our CFO, Aparna Iyer. We also have our CHRO, Saurabh Govil, on this call. Afterwards, the operator will open the bridge for Q&A with our management team. Before Srini starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements within the meaning of Private Securities Litigation Reform Act, 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detailed filings with the SEC. Wipro does not undertake any obligation to update the forward-looking statements to reflect events and circumstances after the date of filing. The conference call will be archived and the transcript will be available on our website. With that, I would like to turn over the call to Srini. Srini, over to you.
Srini Pallia (Wipro Ltd): Thank you, Abhishek. Good evening. Thank you all for joining us today. This quarter, demand environment has remained largely unchanged. Our clients remain focused on efficiency and productivity while increasingly looking to accelerate
Srini Pallia (Wipro Ltd): adoption and drive long term values. This balance between efficiency and growth is shaping demand across industries. Let me begin with what we see in our priority sectors. In BFSI, we continue to see strong momentum. Clients are focused on cost optimization, legacy modernization, and scaling agentic AI across the enterprise. Digital native and new age firms are driving demand in our technology sector. Investments in custom silicon, design to manufacture, and physical AI are creating opportunities across the engineering value chain. We also see growth emerging across AI model ecosystems from model training and evaluation to execution. In EMR, Energy, Manufacturing and Resources sector, we are seeing some good wins in previous quarters and those deals are ramping up. This sector continues to gain traction across markets. Specifically, I would like to call out CPS and Engineering. In Consumer sector, we are seeing good traction in CPG, travel and transportation. Our recent new wins and revenue from Olam deal have also supported our performance in this sector. However, healthcare in US continues to be affected by policy changes. At the same time, cost pressures across payers and providers are creating new outsourcing opportunities. This, along with our differentiated platform based offerings and including rising regulatory requirements, we are shaping our pipeline. Moving to financial performance for the quarter, in Q2, our IT services revenues stood at $2.61 billion, flat sequentially and up 0.6% year-on-year in constant currency. Our operating margin for the quarter was 16.5%, an improvement of 0.5% compared to last Within our markets, three of our four SMUs, strategic market units, reported sequential growth. Americas 1 declined sequentially due to client specific issues and softness in healthcare. Americas 2 grew sequentially driven by EMR with encouraging momentum in BFSI. Europe grew sequentially and year-on-year, delivering broad-based growth led by BFSI, Consumer, and EMR. APMEA maintained strong traction growing sequentially and year-on-year. Growth was fueled by Consumer, Tech and Comms. Coming to deal wins and pipeline, this quarter, we closed $2.6 billion in total contract value and signed nine large deals. Our bookings reflect a healthy mix of new businesses and expansion of existing engagements. Let me give you an example of a consulting-led, AI-powered transmission deal. A global financial institution engaged Wipro to accelerate its transformation to an AI-enabled operating model. Through this engagement, we'll modernize software development, drive greater efficiency across the life cycle, and scale AI-powered ways of working,
Srini Pallia (Wipro Ltd): strong traction in deal wins and pipeline in the mid-market segment. These organizations understand that AI can be a force multiplier in scaling capabilities and redefining their competitive landscape. As an example, a global mid-market consumer products company selected us to accelerate their technology transformation by establishing an AI capability center in India. Through this engagement, we will scale engineering and technology operations to support ERP modernization, cloud native platforms and AI capabilities for our client. Outcome will drive innovation, improve engineering productivity and strengthen global delivery model for our client. We are beginning to see tangible returns from our strategic investments made in recent quarters. Mindtree has strengthened our position in food and agriculture, opening new market opportunities. Harman DTS has boosted our engineering capabilities, helping us win new logos and deepening existing client engagements. We will continue to make these investments even when they create near-term margin headwinds. They enhance our strategic position, expand addressable markets, and build a stronger foundation for future growth. In April, if you recollect, we launched our AI native unit to help clients transition from traditional delivery models to AI native enterprises. We are making rapid progress. With over 2,000 engineers, including FDEs, forward deployed engineers, we are seeing growing success in outcome-based deals and driving non-linear growth. This investment is already delivering results. Let me share a few examples. One, an SLM deployment for a major US retail bank. Two, implementation of an AI-powered digital plant for one of the largest petrochemical companies in the Middle East. And three, an enrollment and billing SLM deployment for a leading US healthcare payer. In addition, we have also built industry-specific SLM for wealth management, insurance, healthcare, aviation, and asset-intensive industries. Combined with our AI agents and orchestration platform, these capabilities enable us to transform virtually any business workflow into an AI native workflow, helping our clients unlock new levels of productivity, speed, and business value. Based on growing traction in AI, we also accelerated investments in AI services and solutions across five emerging AI growth themes: AI data centers, AI foundry services, physical AI, AI devices, and design to manufacturing. In fact, these services and solutions position us well across the full AI value chain and help us capture opportunities that extend beyond traditional technology spend. With that, let me share our guidance for the next quarter. Q3 for us
Srini Pallia (Wipro Ltd): environment, our business remains resilient. We are very encouraged by emerging opportunities across markets. AI will expand new growth avenues and accelerate demand for higher-value transformation. Signs of this are already evident in the momentum we are seeing across our new AI services. I will now invite Aparna to share details on our financial. Thank you. Over to you, Aparna.
Aparna Iyer (Wipro Ltd): Thank you, Srini. Good evening everybody, and thank you for joining us. I'll share a quick update on the financial performance for quarter two, and after that, we can open it up for Q and A. Our IT services revenue grew 0.6% year-on-year in constant currency terms. Revenues were flat sequentially in constant currency terms. Our operating margin for the quarter was 16.5%, an expansion of 0.5% sequentially. Operational improvements, rupee depreciation offset by our continuing investment in business have been the underlying factors driving this improvement. We will work towards improving the margins even as we create headspace for growth. In terms of the SMU performance and sector performance, I'll share a few numbers. All of them are in constant currency terms. Americas 2 grew 0.9% sequentially, declined 4.7% on a year-on-year basis. Europe grew 0.6% sequentially and grew 5.1% on a year-on-year basis. APMEA grew 3.1% sequentially and 13% on a year-on-year basis. Our Americas 1 business was soft and declined 2.1% sequentially and 2.7% on a year-on-year basis. From a sector standpoint, BFSI grew point grew 1% sequentially and 1.3% on a year-on-year basis. Consumer grew 2.6% sequentially and 6% on a year-on-year basis. Energy, Manufacturing, and Resources grew 1% sequentially while declining 6% year-on-year. Technology and Communications declined 2.6% sequentially while they continued to grow on a year-on-year basis at 7 percent. Health declined 3.8% sequentially and declined 6.5% on a year-on-year basis. In terms of other key financial parameters, our net other income which includes interest income which includes the interest income, declined 68% sequentially, primarily because the investable surplus reduced quarter-on-quarter owing to completion of a buyback in June 2023. As a result of the lower other income, our net income was reported at 32 billion rupees for the quarter. It declined sequentially by 5%. However, the EPS, which is the right metric given that we completed the buyback, for the quarter was at 6.23 rupees, which it increased 0.9% sequentially and 4.2% on a year-on-year basis. We remain relentless in our cash flow generation. Quarter two is yet another quarter of robust operating cash flows. We generated 146% of net income. With this, our gross cash as of 30th September was at 4.6 billion. Our effective tax rate was at 23.9%, flattish compared to same quarter last year. Accounting yield for the average investments held in India was at 7.1%. In terms of the guidance, like Srini said, we expect our revenues to be in the range of $2.571 billion to $2.625 billion. This translates to a sequential guidance of negative 1.5 to a positive 1/2 percent in constant currency terms. We can now open the line up for Q and A. Thank you.
Moderator: Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Girish Pai from BOB Capital Markets. Please go ahead.
Girish Pai (BOB Capital Markets): Yeah, thanks for the opportunity.
Girish Pai (BOB Capital Markets): I want to ask about the TCV number, which is down quarter-on-quarter quite a bit, both from large deal and a total TCV perspective. Were these numbers up to your expectations? If not, what exactly transpired in the quarter?
Srini Pallia (Wipro Ltd): Hi, Girish. Srini here. As far as our TCV of quarter two is concerned, we have few deals where the contract could not be signed on time, because of which they're slipping to this quarter. And both the deals, you know, that we, you know, we could not sign will get signed. As far as we are concerned, you know, the pipeline is very robust and in addition to this deal these two deals, we have a very strong pipeline for quarter three itself and we are very optimistic of better closure in quarter three as far as TCV is concerned, Girish.
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