Wipro revenue seen falling, Tech Mahindra margins rising ahead of Q1
Wipro and Tech Mahindra are set to report divergent June-quarter results today, reflecting the broader strain on India's IT sector from client demands to share cost savings from artificial intelligence.
India's fourth-largest IT services firm, Wipro, and rival Tech Mahindra are scheduled to release their first-quarter results today. Shares in both companies climbed in early trading ahead of the announcements. The earnings arrive at a challenging juncture for the Indian technology sector, which is facing volatile macroeconomic conditions and escalating geopolitical tensions.
A central theme for the industry is mounting pressure from clients to pass on productivity gains driven by artificial intelligence. This dynamic is expected to suppress revenue growth across the sector during the June quarter. Investors are closely watching how individual firms navigate this structural shift in pricing power and client negotiations.
Divergent Performance
Analysts forecast a 1.5% quarter-on-quarter decline in Wipro's IT services revenue. The drop is attributed to delayed project ramp-ups, weakness in a major client account, and a softer banking and financial services segment in the United States. According to Equirus Securities, recurring IT services EBIT margins are projected to contract by 30 basis points as wage increases and deal ramp-up costs offset benefits from currency movements and cost efficiencies.
Despite the near-term revenue pressure, Wipro's deal pipeline remains a bright spot. The firm is expected to maintain healthy order intake, particularly for large contracts. However, Equirus Securities anticipates management will guide for a flat to 2% quarter-on-quarter decline in constant-currency US dollar IT services revenue for the second quarter.
Tech Mahindra presents a contrasting operational picture. The company is expected to post a 1% quarter-on-quarter increase in constant-currency revenue, buoyed by the continued ramp-up of large telecom contracts and a resilient BFSI sector. While the high-tech segment is likely to remain soft due to cautious discretionary spending, manufacturing revenues are seen holding stable despite headwinds in the US automotive market.
Margin expansion is a key focus for Tech Mahindra. EBIT margins are forecast to improve by 50 basis points quarter-on-quarter to reach 14.3%. This growth is expected to be driven by delivery efficiencies, better gross margins, and the ongoing execution of its Project Fortius cost optimization initiatives.
For market professionals, the contrasting margin trajectories highlight a bifurcated sector. While top-line growth remains constrained by external macro factors and AI-driven pricing negotiations, operational execution is becoming the primary differentiator. Tech Mahindra's ability to expand margins through internal initiatives contrasts with Wipro's current investment phase, setting up a pivotal earnings season for valuations in Indian IT.
