Wipro, a leading IT services company, saw its shares surge by nearly 6% on Friday following the announcement of a 21.2% year-on-year increase in consolidated net profit for the second quarter of FY25. The company's stock closed 5.52% higher at Rs 558 on the BSE, while gaining 5.60% on the NSE. Despite the impressive profit growth, driven by higher operating profits, Wipro provided a weak revenue outlook for the upcoming quarter. Nevertheless, the company remains optimistic about its long-term potential amid the current global economic uncertainties.

Q2 FY25: Strong Profit Growth Despite Revenue Decline

Wipro reported a consolidated net profit of Rs 3,208.8 crore for Q2 FY25, marking a 21.2% year-on-year increase compared to Rs 2,646.3 crore in the same period last year. This impressive growth was driven by strong operational efficiency, despite a slight 0.95% decline in revenue from operations, which stood at Rs 22,301.6 crore, down from Rs 22,515.9 crore in Q2 FY24.

While the profit growth exceeded market expectations, the dip in revenue signals a more challenging operating environment for the company. Wipro's CEO and MD, Srini Pallia, credited strong execution for the company’s ability to meet expectations in revenue growth, large deal bookings, and margins.

Strong Execution and Key Sector Growth Drive Performance

Srini Pallia emphasized the role of strong execution in delivering robust quarterly results. Wipro continued to expand its top accounts and secured large deal bookings exceeding $1 billion for the quarter. The company experienced growth across three out of four markets and made significant strides in key sectors, particularly in BFSI (Banking, Financial Services, and Insurance), consumer, technology, and communications sectors.

Pallia also highlighted that Capco, a global business and technology consultancy acquired by Wipro in 2021, maintained its momentum for another consecutive quarter, contributing positively to the company’s performance.

Challenges Ahead: Weak Q3 Revenue Outlook

Despite the strong Q2 performance, Wipro’s revenue guidance for the October-December quarter (Q3 FY25) reflects caution. The company anticipates a sequential revenue growth of -2% to 0% in constant currency, largely due to expected seasonal furloughs and fewer working days during the holiday season.

Pallia acknowledged the challenges ahead, stating that although there is softness in revenue projected for Q3, Wipro remains confident of maintaining margins within a narrow band. The company had previously guided for revenue growth of -1% to +1% for Q2 FY25, indicating that the near-term outlook remains constrained by external factors.

Long-Term Potential Remains Strong Amid Economic Uncertainties

While the near-term revenue forecast remains tepid, Pallia expressed confidence in Wipro’s long-term business potential. He pointed out that despite the current economic uncertainties, Wipro is well-positioned to handle the evolving market conditions. The company’s strategic focus on expanding large deals and maintaining a strong presence in key growth sectors will continue to support its long-term trajectory.

“The long-term potential of our business is strong, and we are prepared to handle the current economic uncertainties,” Pallia assured investors during the earnings press conference.