Wipro’s shares surged nearly 8% on Monday, their most significant single-day gain in almost four years, following the company’s positive third-quarter results and optimistic outlook for 2025. This surge aligns with similar trends seen among other major Indian IT services companies, suggesting a potential revival in demand within the sector.
Wipro exceeded third-quarter profit expectations and projected sequential revenue growth of up to 1% in the current quarter. This contrasts with the stagnant growth experienced in the previous quarter. CEO Srinivas Pallia attributed this positive shift to the gradual return of discretionary spending after a period of macroeconomic challenges in 2024.
Analyst Piyush Pandey of Centrum Broking noted that the guidance represents an improvement from the previous quarter. Deal bookings, including small to mid-sized deals, indicate a resurgence in discretionary tech spending. Wipro’s strong performance propelled its shares to become one of the top gainers on the Nifty 50 index. LSEG data reveals that at least eight brokerages upgraded their rating on Wipro’s stock, while sixteen raised their price targets following the announcement.
Wipro’s optimistic forecast for 2025 mirrors the sentiment expressed by industry leaders TCS, Infosys, and HCLTech. This positive outlook follows a period of suppressed growth in the $254 billion IT services sector. Clients had previously curtailed spending due to macroeconomic uncertainties and inflationary pressures.
A key indicator of renewed discretionary spending is Wipro’s 11% revenue increase in the BFSI (banking, financial services, and insurance) segment, which constitutes roughly one-third of its total revenue, as highlighted by Jefferies analysts.
Asian Market Securities analysts observed that Wipro’s operating margin reached a three-year high of 17.5%, exceeding expectations. This improvement is attributed to rigorous deal execution. For the current quarter, Wipro anticipates revenue to fall within a range of -1% to +1% sequentially. ($1 = 86.4390 Indian rupees)
In conclusion, Wipro’s strong third-quarter performance, coupled with its positive outlook for 2025, signals a potential turning point for the IT services sector. The company’s success in navigating macroeconomic challenges and securing new deals suggests a resurgence in demand and a promising future for Wipro.
