Wipro (NS:WIPR) Ltd shares surged over 5% in early trade on Friday, following the company’s announcement of its second-quarter earnings for FY25 and a bonus share issue.
The stock climbed as much as 5.34% to reach ₹557.05 on the BSE, driven by strong revenue performance and the 1:1 bonus share announcement.
Q2FY25 performance boosts investor confidence
Wipro, India’s fourth-largest software services exporter, reported IT services revenue of ₹22,196 crore for the quarter ended September, reflecting a sequential increase of 1.4% from ₹21,896.3 crore in the previous quarter.
In dollar terms, the company posted revenue of $2,660 million, up 1.3% from $2,625.9 million in Q1FY25.
Wipro recorded a 28.8% sequential rise in large deal bookings, reaching $1.5 billion, signaling robust demand despite macroeconomic headwinds.
The company’s IT services EBIT increased by 3.5% to ₹3,732 crore, with the EBIT margin improving by 30 basis points to 16.8% from 16.5% in the previous quarter.
Despite the upbeat earnings report, Wipro’s guidance for Q3FY25 was cautious.
The company forecasted IT services revenue in the range of $2,607 million to $2,660 million, translating to a sequential decline of -2.0% to flat growth in constant currency terms, reflecting weak seasonal trends.
Bonus share issue fuels market optimism
Adding to investor enthusiasm, Wipro’s board announced a 1:1 bonus share issue, meaning shareholders will receive one additional share for every share held.
The bonus issue reflects Wipro’s strategy to enhance shareholder value and reward long-term investors.
At 10:45 am on Friday, Wipro shares were trading 4.39% higher at ₹552.00 per share on the BSE, reflecting positive market sentiment following the announcement.
Analysts weigh in on Q2 results and outlook
Nomura praised Wipro’s performance, noting that the company’s Q2 results surpassed expectations across key metrics.
Despite strong large deal momentum, Nomura highlighted that Wipro’s cautious Q3 guidance reflects seasonal challenges.
The brokerage has maintained its ‘Buy’ rating on Wipro, with a target price of ₹680 per share.
Meanwhile, Antique Stock Broking took a more tempered view, acknowledging the positive Q2 performance but flagging concerns over Wipro’s underperformance relative to peers like Infosys (NS:INFY) and HCL Technologies (NS:HCLT).
The brokerage noted that Wipro has struggled with a steeper-than-expected decline in consulting and discretionary spending over the past few quarters.
Antique maintained its ‘Hold’ rating on Wipro shares, keeping the target price unchanged at ₹575 per share.
The firm adjusted its revenue forecasts for FY26 and FY27, reducing them by 1%-2%, while also trimming its EPS estimates by 2%-3%.
Outlook tempered by seasonal trends
While Wipro’s gold standard in large deal wins and stable margins provides a positive outlook, analysts remain cautious about the near-term prospects.
The guidance for the December quarter points to muted growth, with seasonal weakness and wage hikes expected to impact profitability.
Wipro’s stock performance will likely hinge on how well the company navigates these challenges, especially as it aims to stabilize margins despite wage pressures.