Wipro Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Wipro Ltd (WIPRO) Q2 FY23 Earnings Concall

Management Update:

• [00:14:41] WIPRO said its attrition has continued to moderate for the third quarter in a row, down to 23% in 2Q23 and the company expects it to moderate further in 3Q23.

• [00:16:15] The company is certain to report double digit growth for FY23, while margins in 3Q23 is expected to have some headwinds due to the impact of salary increases.

Q&A Highlights:

• [00:19:53] Sandeep Agarwal of Edelweiss enquired about any caution or restraints seen from WIPRO clients. Thierry Delaporte CEO answered that there is a certain evolution of market that shows that the market conditions have changed. WIPRO added that its clients too feel the implications of the uncertainty and are a bit cautious.

• [00:25:11] Abhishek Bhandari with Nomura asked about the Capco and Rizing consulting acquisition trends. Thierry Delaporte CEO replied that consulting acquisition has been a massive growth driver for WIPRO. Capco grew more than planned each quarter. However, it has slowed down as consulting is extremely agile to market evolution.

• [00:28:19] Abhishek Bhandari from Nomura asked about the steps taken to reduce the gap between WIPRO margin and peer set margin. Thierry Delaporte CEO clarified that it’s a strategic decision and the company added that it’s not worried about its ability to improve margins and close the gap with its peers.

• [00:32:31] Nitin Padmanabhan of Investec enquired about the restructuring cost impact in 2Q23 of around INR136 crores. Thierry Delaporte CEO said that restructuring is a one-off cost and is exclusively focused on Europe to address the inefficiency carried for a long time.

• [00:36:54] Ravi Menon from Macquarie Group asked about the demand environment in the US and Europe. Thierry Delaporte CEO replied that when there is a recession it’s steeper in the US, and in Europe it comes a little later and takes time to bounce back. For WIPRO the growth in US and Europe are similar.

• [00:40:50] Mukul Garg with Motilal Oswal enquired about the profitability of the consulting business in the near term. Thierry Delaporte CEO said that this business is slowing down but it’s also driving growth for WIPRO businesses. From a profitability standpoint, consulting is agile and as they are slowing down, margins are improving.

• [00:42:42] Mukul Garg of Motilal Oswal asked about growth versus profitability trade-off over the next few quarters. Thierry Delaporte CEO clarified that on the margin side, WIPRO won’t go down from where it is. And on growth, the objective is to drive profitable growth, and both margin and growth will be balanced.

• [00:46:50] Mukul Garg from Motilal Oswal queried about capital allocation and taking a step back from acquisitions given the current environment. Jatin Dalal CFO said that acquisition remains the core part of WIPRO strategy and 50% of cash generated will be returned to shareholders; there won’t be any change in these two strategies.

• [00:52:52] Manik Taneja with JM Financial asked about the price increases over the next 6-9 months given the macro volatility. Thierry Delaporte CEO answered that price increase being a margin lever for the industry has been the case till last quarter and WIPRO is assuming that prices will increase from its clients going forward.