India's Wipro lags peers after earnings miss, weak forecast

By Haripriya Suresh and Sai ‌Ishwarbharath B

BENGALURU, July ​16 (Reuters) - ​Wipro missed quarterly earnings estimates and forecast a weak recovery, raising fresh concerns about the Indian IT firm losing ground to rivals as ‌demand in its key Americas market softens.

After Thursday's news, its U.S.-listed ⁠shares fell as much as 2.2% in pre-market trading and underscored the challenge CEO Srinivas Pallia ‌faces in reviving growth at ‌India's No. 4 software-services exporter more than two years after taking charge.

"Wipro is lagging its peers," Centrum Broking analyst Piyush Pandey said. "It's possible that the type ​of legacy deals that Wipro has, is not able to generate sustaining growth."

The Bengaluru-based company's troubles are a sign of the mounting pressure on India's $315 billion ⁠IT sector, where cautious clients are cutting non-essential spending while using AI to squeeze greater efficiency.

Rivals Tata Consultancy ​Services, HCLTech and Tech Mahindra beat quarterly revenue expectations, helped by a depreciating rupee and strength in varying segments.

Wipro forecast second-quarter ​revenue of $2.57 billion to $2.63 billion, a 1.5% decline ‌to 0.5% growth from the quarter ended June. Analysts had expected guidance of between a 1% decline and a 1% increase.

Revenue ⁠rose 10.6% year-over-year to 244.79 billion rupees ($2.54 billion) in the first quarter, missing analysts' average estimate of 247.76 billion rupees, according to data compiled by LSEG. Net profit edged up 0.6% ⁠to 33.52 billion rupees, underwhelming estimates of 34.42 billion rupees.

Total deal wins for Wipro fell ​to $3.37 billion from $5 billion a year earlier.

The Americas market declined due to client-specific issues and tech spending cuts in the healthcare segment, CEO Pallia said, without sharing further details.

Wipro's operating margin ‌slipped to 16% from 17.3% in both the preceding quarter and a year earlier, as salary hikes and the ramp-up of ‌several large deals weighed.

The company warned of "near-term margin volatility" as it invests in employees and ⁠strategic growth areas amid a ‌rapidly evolving technology landscape, CFO ​Aparna Iyer said.

($1 = 96.3450 Indian rupees)

(Reporting by Haripriya Suresh and Sai Ishwarbharath B in Bengaluru; Editing by Sonia Cheema, Dhanya Skariachan and ‌Mrigank Dhaniwala)

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