Q1 2026 Wipro Ltd Earnings Call
Ladies and gentlemen, good day and welcome to viprow limited q1 fee 26 earnings conference call.
as a reminder all participant lines will be in the listen, only mode and there will be an opportunity for you to ask questions after the presentation concludes
Should you need assistance during the conference call please signal an operator by pressing star and zero on your touchtone phone.
Please note that this conference is being recorded.
Deeper Bora: I now hand the conference over to Mr. Deeper Bora senior, vice president, corporate Treasurer, and investor relations. Thank you and over to you, sir.
Deeper Bora: Yeah, thank you. Yes history.
Speaker Change: Uh warm welcome to our quarter 1 Financial year, 2026 earnings call.
Speaker Change: uh, we will begin the call with business highlights and overview by streaming, was Paula, our chief executive officer and managing director,
Speaker Change: Followed by updates on financial overview by our CFO op.
Speaker Change: We also have our chro sort of go on this call.
Afterwards, the operator will open the bridge for Q and A with our management team.
Speaker Change: Before streaming starts, let me draw your kind attention to the fact that during this call. We may make certain forward-looking statement within the meaning of private Securities. Litigation Reform, Act, 1995,
Speaker Change: Statements are based on Management's, current expectations and are associated, with uncertainties, and risks. Which may cause the actual results to differ materially from those expected.
Speaker Change: The uncertainties and risk factors are explained in our detailed filings with the SEC.
Speaker Change: Viprow does not undertake any obligations to update. The forward-looking statements to reflect events and circumstances after the date of filing.
Speaker Change: The conference call will be archived and the transcript will be available on our website.
Speaker Change: with that, I would like to turn over the call to 3D
Speaker Change: Thank you.
Deepak: Thank you, Deepak.
Speaker Change: Good evening, everyone.
Speaker Change: Thank you for joining us today.
Let me start with a quick view on quarter 1.
Speaker Change: And the broader environment.
Speaker Change: We started the quarter facing significant macro uncertainty.
Which kept overall demand muted.
Speaker Change: Our clients.
Speaker Change: Prioritized initiatives.
Speaker Change: With immediate impact.
Speaker Change: Primarily focusing on cost optimization and vendor consolidation.
Speaker Change: but at the same time,
Speaker Change: The Accelerated their EI data and modernization programs.
Speaker Change: We saw a clear trend of many AI projects moving to scale and production.
Speaker Change: We quickly aligned with these priorities.
Speaker Change: Depend on Partnerships.
Speaker Change: And secured key teams.
Speaker Change: The large deals, we close this quarter.
Speaker Change: And last quarter.
Along with a strong pipeline.
Speaker Change: Put us in a good position for the second half of the year.
Speaker Change: With that.
Speaker Change: Let me now turn to our quarter 1 performance.
I will start with key financial highlights.
Speaker Change: And an overview of our markets and sectors.
AA: AA will provide further details on the financials in a remarks.
AA: Our IT services revenue for quarter 1 was dollar 2.59 billion.
AA: Quarter on quarter, degrowth of 2% in constant currency terms.
AA: Within our guidance range.
Variety Services margin.
AA: Was 17.3%.
AA: An expansion of 80 basis points.
AA: Year on year.
AA: In our markets.
AA: America's grew 1.5% year on year, in constant currency terms.
AA: And we are continuing to see.
AA: Strong real momentum here.
AA: RS, Revenue State flat.
AA: Digital spending in India, Middle East, and Southeast Asia.
AA: Keep the market resilient.
AA: Europe continued to face headwinds.
AA: and climate remains focused on maintaining their
AA: competitive competitiveness in this environment.
AA: Cap Code grew year on year driven by strong performance in Latin America.
AA: Turning to our industry, sectors.
AA: In pfsi.
AA: Demand is strong and steady.
AA: Clients are modernizing their it landscape.
AA: With a sharp focus on Ela deficiency and transformation.
AA: 1 2 Mega deals here.
AA: Which I will discuss later.
AA: In consumer and EMR.
AA: We are seeing a more cautious mode.
AA: Retail, cpg, and Manufacturing have been most affected by tariffs.
AA: even though this Creationary budgets are tied,
AA: Outsourcing renewals are creating new opportunities.
AA: To gain wallet shares.
AA: In technology and communication.
AA: We are seeing a clear shift towards AI Investments.
AA: Banks are looking to innovate and future proof their software and platform.
AA: We want a large deal here, that has a potential to become a mega deal.
AA: Healthcare continues to do well as clients invests in modernization and digital transformation.
AA: While payers are under cost pressures.
The overall outlook for the sector remains positive.
AA: These priorities and shifts.
AA: Inclined Focus.
AA: Or evidence in the Strategic deals where 1 in quarter 1.
During the quarter.
AA: we reported bookings Worth Dollar 5 billion in total contract, value a growth of
AA: 51% year on year.
Our large deal booking, switched dollar 2.7 billion up 131% year on year.
AA: This includes.
AA: 16 large deals is water.
AA: Including 2, Mega deals.
AA: Several of these winds were driven by vendor consolidation.
AA: Where we continue to build strong momentum.
AA: These deals reflect a good balance of extension of existing work and securing new business.
They also highlight our capabilities, domain expertise and progress in AI.
AA: Let me share 3 examples to bring this to life.
AA: My first example is a global banking leader.
AA: That selected as as a strategic partner.
To transform technology across multiple business lines and Enterprise functions.
AA: They chose us for our deep bfsi expertise.
AA: And Consulting LED approach.
AA: We will transform the digital ecosystem.
AA: Modernize their cloud and data platforms.
AA: Improve cyber resilience.
AA: And embed AI across the software development life cycle.
AA: Helping boost engineering productivity.
AA: And reimagine core processes.
AA: Second.
AA: A leading Global Semiconductor Company. Signed a multi-year agreement with us.
AA: To modernize its entire product life cycle.
AA: Building on our long-standing partnership.
AA: We will drive end to end engineering transformation.
AA: From Silicon design and system software.
AA: To platform development and Hardware, validation.
AA: Our focus is on using EI and automation.
AA: To accelerate development, improve quality.
AA: Reduce costs and enable agile practices.
AA: Finally.
AA: We secured a mega deal with the leading North American Bank.
AA: Extending a decade, long partnership.
AA: We will transform the technology across core banking.
AA: Wealth Management.
AA: And Retail.
Using our AI powered Global delivery framework.
AA: This includes modernizing their Cloud infrastructure.
AA: Strengthening cyber resilience.
And enhancing their digital ecosystems and Enterprise applications.
AA: This will accelerate innovation.
Improved time to Market.
And deliver more customer Centric experience for our clients.
in fact, these examples
AA: Highlight a clear trend.
AA: Here is no longer a niche.
AA: but we
Pro we see AI.
AA: As a force reshaping Industries.
And amplifying human potential.
AA: We at viprow.
AA: Are building an AI first.
AA: AI everywhere. Enterprise.
AA: Focused on solving complex challenges.
AA: Accelerating delivery.
AA: And reimagining operations at scale.
By embracing autonomous and agentic AI.
AA: We are transforming business models and how organizations work.
AA: In fact, our AI capabilities are integrated into both industry and cross-industry solutions.
AA: By combining domain expertise with AI.
AA: We are able to deliver value.
Through Solutions.
AA: Such as hyper personalised Wealth Management.
AA: And predictive industrial insights to name a few.
So far, we have deployed over 200 EI power agents using Advanced Technologies from leading hyperscalers.
AA: for example, these agents enable smarter Lending
AA: Intelligent claims processing.
And autonomous Network management.
AA: We are equally focused on Talent.
AA: And training our team with the skills and mindset.
AA: To thrive in an EI first world.
AA: Building on these strong foundations.
AA: And our continued focus on 5, strategic priorities.
AA: We are well positioned for the future.
AA: I would like to now discuss our outlook for the next quarter.
AA: While we are cautious, given the macro environment.
AA: Our strong order book.
AA: Healthy Pipeline and focus on Consulting. Lead AI powered Solutions.
AA: He was confident in delivering long-term value to our stakeholders.
AA: Returning to profitable growth. Remains our priority.
Based on our visibility, we are guiding for a sequential growth of minus.
AA: 1% to plus 1% in constant currency terms.
AA: With that.
Speaker Change: Let me hand over to a for a detailed view on our financials.
Speaker Change: Thank you again and to your partner.
Speaker Change: Thank you, shiny. Good evening, ladies and gentlemen. Uh, let me give you a brief update on the financial performance, for the quarter ended, uh 30th, June 2025, after that, we can open it up for questions.
Speaker Change: A IT services revenue for q1 sequentially declined by 2%. In constant currency, which is, well, within our guidance range on a year-on-year. Basis, the revenue decline by 2.3% in constant currency terms are operating margins for q1 was at 17.3% and expansion of 18 uh basis points on a year-on-year basis.
Speaker Change: A senior lured. Many of our large deal wins are in the nature of cost, takeout, or vendor consolidation.
Speaker Change: These deals typically, come with upfront Investments and uh, will cause pressure on the cost.
Speaker Change: As always, we will continue to focus on operational excellence in order to offer these sessions.
Speaker Change: Let me give you a color on our strategic Market unit and sector performance.
Speaker Change: All growth numbers that I will share will be in constant currency.
Speaker Change: America's 1 group 2% sequentially and grew 5.8% on a year-on-year basis, America's 2 deck, 1.7% sequentially, and declined, 2.7% on a year-on-year basis.
Speaker Change: Europe declined, 6.4%, sequentially and 11.6% on a year-on-year basis. Apnea has grown 6% sequentially, this quarter.
Speaker Change: Uh though uh declined marginally uh on a year-on-year basis.
Speaker Change: Moving to sectors. Bfsi declined, 3.8% sequentially, and also decline 3.5% on your, on your terms.
Speaker Change: Healthcare grew, 0.5% sequentially and has grown 3.5% year on year.
And uh, declined 5.7% on a year-on-year terms.
Speaker Change: Technology and communication group 0.4%, sequentially.
Speaker Change: And we grew 3% year on year.
Energy, manufacturing and resources declined, 0.7% sequentially at 2.4% on a year-on-year basis.
Speaker Change: Capco continues to perform well growing 6% on a year-on-year basis. Let me share with you.
Speaker Change: Some of the other key financial parameters, our net income grew 10.9%.
Speaker Change: Uh on a year-on-year basis in this quarter, this was after absorbing for a 1-time restructuring cost of INR to 46 crores.
Speaker Change: Our EPS for the quarter. At INR, 3.2, uh, grew by 10.8% year on year, our free cash flow generation continues to remain robust,
Speaker Change: It was at 115% of our net income.
Speaker Change: Mistakes are gross cash, including Investments to be at 6.4 billion and net cash. Actually expanded quarter on quarter in q1,
Our net other income grew 62% on a year-on-year basis accounting yield for the average Investments held in India was at 8.1% for q1. Our effective tax rate was at 21.6% for q1 26. This is versus 24.5% that we have for the last year and same time. Last quarter was also 24 and a half.
Speaker Change: I had just continued to be in line with our policy yet about 2.5 billion dollars of Forex derivative contracts.
Speaker Change: as headers at the end of q1 26,
Speaker Change: Finally, before I moved to the guidance, I would like to share with all of you that in our board meeting today, the board board of directors have declared an interim dividend of INR, 5 rupees per share with this.
Speaker Change: We would have now distributed cache in excess of 1.3 billion in the last 6 months.
Speaker Change: As you know, we revised our Capital allocation policy in January 2025 to increase the payout to a minimum of 70% of our net income, over a block of 3 years.
Speaker Change: That's going forward subject to the cash position.
Speaker Change: and board approvals our Endeavor would be to pay these uh, dividends twice a year once along with the June results and then along with our December quarter results,
Speaker Change: In terms of guidance to reiterate what shiny shared. We expect revenues from Our IT services revenues business to be in the range of 2.56 billion dollars to 2.612 billion dollars.
This translates to a sequential growth of minus 1% to plus 1% in constant currency terms.
Speaker Change: With that, we can take questions, operator.
Thank you very much.
Speaker Change: We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and 1 on their touchdown telephone
Speaker Change: If you wish to remove yourself from the question queue, you may press star and 2.
Speaker Change: Participants are requested to use handsets, while asking a question.
Speaker Change: Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Speaker Change: We'll take our first question from the line of Abhishek Kumar. From JM Financial, please go ahead.
Abhishek Kumar: Yeah, hi. Good evening. Uh, thanks for taking my question, and congratulations on very strong. The event. My question is the first question is on the deal when itself
Abhishek Kumar: Um so um you know, on an LTM basis, the overall deal uh deal uh tcv has grown by 10%. But if I look at the smaller deals on an LTM basis, it's it's down. Uh, 8% while I
Abhishek Kumar: Uh, so my question is, have we seen any, uh, kind of given uh you know, these large deals are longer in tenure any material increase, uh, in Deal duration? And therefore um, how should we look at the ACV growth for us to really model growth going forward?
Abhishek Kumar: You are correct that our tcv uh has been uh growing much faster than the ACV. And this is also because the deal channels have been going up.
Abhishek Kumar: To start point, there is uh the large deals are dominating uh the pipeline in terms of uh how we run because you know, last year, we want to make our deals this year. We starting with a uh 2 Mega deal wins in 1 quarter. So so therefore, in some sense, the tcv bookings, uh, led by a large disease is indeed. Uh, growing much faster than the uh uh, smaller and medium days. It is also true when you keep in uh, the context that the discretionary spends are being weak
Abhishek Kumar: and uh,
What is number 1, priority and agenda for our clients is also cost takeout and um in some sense that also fuels what they would like to spend in newer areas.
Abhishek Kumar: So, uh, that's that's basically how I would like to characterize that.
Speaker Change: Sure that's clear. Uh second question is on Capital allocation you know the last 2 uh payouts after the tax regime change has been in the form of dividend.
Speaker Change: So have we decisively moved towards the dividend route and uh, is uh, you know, buy back now, uh, not in consideration.
Speaker Change: We raised the capital allocation policy from 45 to 50 income to uh upwards of 70%, on a 3 year basis. So and when we did do that, we uh, had communicated that we continue to prefer dividends and buy back as a means of returning cash to our shareholders. Uh, for now in the January quarter, and this quarter, we've, uh, given out dividends buyback, continues to remain an option and, uh, we could consider that at an appropriate time.
Sure. Uh, thank you and all the best.
Speaker Change: Thank you.
Speaker Change: Thank you, we'll take our next question from the line of nitin Perman from investec. Please go ahead.
Speaker Change: Yeah, hi. Good evening. Uh, um, uh, good quarter, uh this, uh,
Speaker Change: Uh, uh, but now I wanted your thoughts on, uh, the margins. Now you did mention that a lot of these deals are, uh, obviously, uh, we'll have some margin impact. Um, so considering that you'll have an execution of a lot of these deals coming through. Um, do you believe that, uh, current margins can hold on from where it is, or how should we sort of think about margins on a going forward basis?
Speaker Change: You don't guide for margins. Uh nitin. Uh, we've had a very good run on, uh, operating margin improvement over the last 8 quarters. We're very excited with the Quantum of deals that we booked, um, you know, these deals, uh, prove, uh, the capability of fast, you know, winning in large vendor consolidation. In fact, we shared that, you know, nearly a substantial portion of our large deals actually came from our top clients,
Speaker Change: So we're very happy with the win. Our focus and energy is going to be on conversion, right? Uh a lot of these deals will ramp up over the next 4 to 6 quarters.
Speaker Change: These deals have uh a good balance of both renewing and an element of expansion and the expansion will come through ramp up consistently over the next few quarters. Right? So all hands on the deck that will mean we will have to make certain upfront Investments.
Speaker Change: And uh you know these are larger deals and are like strongly contested and therefore the nature of the deals. Uh you know the margin profile is a weaker compared to the rest of portfolio so there will be some pressure
Speaker Change: You've seen our ability to continuously improve our operating margins. Those operating levers will continue to remain at play and um, that's what I can share at the moment.
Speaker Change: Sure fair enough that's uh helpful. Uh thank you so much and all the best.
Thank you.
Speaker Change: question from
Speaker Change: Morgan Stanley. Please go ahead.
Speaker Change: Hey, congrats shiny, congrats on good execution. Uh, my first question is on the kind of the deals if you look at the last, uh, 1 year, you know, the areas where we have won the deals. Like, uh, the deal with the insurance on claim side, uh, the deal with the Telecom player in the US, these are areas where we Pro had traditionally, not been very strong or been present. Uh, so what weeks we have made to be able to win deals with, which probably traditionally has not been very strong for so just trying to understand uh the initiative taken uh around that
Speaker Change: Uh, right.
Shiny: Photo. This is shiny here. Uh, thank you for the question.
Shiny: If you look at uh, what we called out at the beginning of last year, we said we want to be Consulting lead and AI forward.
What that meant gave us as part of the strategy. We called out 5 sectors and within those sectors specific Industries, where we want to be dominant.
Shiny: So that means we invested in terms of creating domain expertise.
Shiny: To, uh, we all know, like upon us said, we have won these deals. These Mega deals in some of our top clients. We also talked about as much as part of our strategic priority, that we're going to invest into growing growing a large accounts. So the 2 strategies that we talked about followed by the third 1, where we said we're going to build industry and cross-industry solutions all the 3, uh, strategic priorities, really helped us, uh, to understand what the client was looking at both in the context of, uh, business in the context of experience that they were looking for their clients and the way they have to modernize them. And how to
Shiny: Leverage, AI to bring in efficiency, optimization and velocity.
Shiny: And, uh, and so these deals are for me personally, very exciting, uh, gov and uh, and uh, that's the reason I think, uh, we've been able to dominate in some of the, some of the deals that we talked about uh, of the 16 large deals. Uh uh 2 of them were my card deals 1 as a potential to be a mega deal. And I talked about the 3 case studies, and if you look at it clearly, you know, it it has been AI powered. It has been Consulting late, and it also understands the client's landscape and we will continue to do more of this kind of as we move forward. And the last point, is also being very proactive, in terms of listening, to the client and responding to their needs.
Speaker Change: Thanks so very detail. Answer, second question on you mentioned last time that there were certain pauses on large projects. Uh you give example also on sap project that were paused by the clients. Have you seen any update on that has thing have things started to move and is this part of your guidance?
Speaker Change: No, go. If you look at the overall environment in the context of tariffs in the context of geopolitics,
Speaker Change: And the economy, I think there are certain sectors, uh, which have been really impacted, uh, and we called out, uh, manufacturing especially automotive and Industrial. We also called out retail and cpg, which has the a great impact due to know over Reliance on global supply chain. And 1 of the project that I called out, last quarter was in 1 of the sectors and uh, they are still, you know, as you know, tariffs are still being evaluated. So the client has bought on that particular program at this point in time and they would want to have a complete Clarity before they get started, so those kind of projects got was still on hold. Um and that's uh, and I'm hoping that, you know, if things settle down in the next couple of quarters, uh, hopefully they'll the client will come back to reinvest in those transformation programs.
Speaker Change: Thank you. Last question, on margins. Uh, I understand the puts and takes you explained uh, on margins, especially on the large days of front investment. But uh, fair to say that, uh, you would aspire to be in the band of around 17% that you had been calling out in the past few quarters, keeping these puts and takes into mind. Thank you.
Speaker Change: So certainly that remains a ban that uh is where we would like to uh operate uh got a but uh having uh secured these deals uh focused and priority is going to be to ramp up these deals and execute and uh deliver them and uh therefore there will be certain Investments. So there could be certain quarters where we will have to make those Investments but uh uh you're right. When you say that 17 to 17 and a half percent band that we called out earlier remains a band that, you know, we would like to operate in
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: We'll take our next question from the line of Surendra. Go from City Group, please go ahead.
Surendra: Yeah. Hi. Uh, good evening. Uh, so just 1 question on the deals again. Like how comfortable are you that? The 10 odd percent increase on trailing 12 month tcv?
Speaker Change: you saw a revenue Decline and in that context, is it possible to provide any sense on the ACV growth even directionally
Speaker Change: maybe I'll
give in my comment and ask Opana to add to that.
Speaker Change: First and foremost, uh, if you look at, uh, uh, the opening remarks that I made is that we had a very strong bookings in quarter 1.
Speaker Change: We have a very strong pipeline in quarter 2.
Speaker Change: And I also said that our H2 will be much better than H1. And this confidence comes based on the bookings that we have done. And the point that upon talked about we are now staying very focused on execution. Some of these deals will get transition and you know getting to steady state anywhere from 3 months to 6, months time frame. So that gives us a conference to talk about second off Surendra and maybe upon if you want to add some more.
Speaker Change: Well, you know, you, you you your your observation is Right. Sometimes these tcv, uh, and ACV, you know, have a different growth trajectory given how long a tenor deals, keep getting signed and therefore what impact that has on conversion. The other factor that has uh, come in the way of the conversion has been just the discretionary spend environment and therefore how there have been subsequent leakages on that account for. Now, at least the discretionary spend, environment seems to have stabilized 1 was
Speaker Change: Was hopeful perhaps that the star of this calendar year that it would improve. But for the moment I think the way we are looking at this financial year is it is going to be stable.
Speaker Change: Um,
Speaker Change: we keep that assumption in mind, you should be able to see a much better conversion of some of these bookings into revenues, uh, Surendra. And that's the end of our
Speaker Change: And, and any comments on like, ACV, growth, even even directionally just for us to understand the trends a little bit better.
Surendra: I think the ACV growth, this quarter has grown well on a year-on-year basis as well. So this is not coming only on the back of longer term deals.
Surendra: And uh, I we we feel fairly confident about, uh, these deals
Speaker Change: Sure. And just 1 clarification, also quite good.
Speaker Change: Yeah, sure, sure, sure. And just 1 last question. Camp, Capco you mentioned, uh, 6%. You could you share the sequential growth number there? Thanks.
Speaker Change: Uh, so we don't we we're not calling all the sequential growth rate. Uh, for Tapco. It's a part of all the uh units, 1 additional point that we had called out in our earnings. Uh are in the media interactions today is that we've had a billion dollars of bookings, trailing 12 months. So in it should give you a good sense. And even into quarter 2, we're looking at a good momentum and trajectory as we start the quarter,
Speaker Change: Uh sure, thank you so much.
Speaker Change: Thank you.
Speaker Change: Take a next question from the line of Viborg single from noama equities, please go ahead.
Yeah. Hi. Uh, thanks for picking my question. Uh, and congrats on a solid performance and a very, uh, volatile environment. Uh, so my question was again on Capco, I think as you mentioned the, the Capco reported of decent of mid single digit, uh, By and By growth. So what basically if you could basically take us through the, uh, overall environment that we are looking at, I mean, this is, uh, environment in which, uh, the post tariff on fitty, 1, in which we have seen, a lot of, uh, uh, challenges and discretionary spends being put on hold, uh, Capco by the nature of its business, probably reflects that and still we are seeing good growth. Uh, do you see this basically momentum continuing, uh, any reasons that you see specifically that we've been able to do well while, uh, there might others might be facing challenges. Any bit of a problem that will be very helpful.
Speaker Change: uh, we've got as far as the cap quiz concerned, uh, just to add to what, uh,
Speaker Change: Opponent talked about in the context of the Iranian growth and also the billion dollar booking that Capco did. We have seen Capco growth across us and apnea on a year on basis, right? And you know growth is driven across insurance.
Speaker Change: Wealth and asset management and energy to be very specific. Where the growth Gap. Also, there has been a good momentum in both apnea and latan, especially in Brazil, which is the actually outside Capco traditional uh, geographies. Uh so these these, you know, these actually helped us, you know, in the context of the growth and the opportunities that we see going forward at for Capco
Speaker Change: Zebra. I'm sorry. You're sounding muffled.
Yeah. Sorry. I went to ask, uh, is the pipeline also looking good in Capco for the coming quarters.
Yeah, it continues to look good for the coming quarters.
Speaker Change: Got it, got it. The city helpful. My second question is basically on the overall, uh,
Front. So I think again, a solid performance on this despite the revenue decline. So I don't know if you answered this before. Sorry I was able to join the caller call late but in terms of margins uh
Speaker Change: Going forward. Uh, do we expect to maintain the same trajectory of 17 to 18% or given the kind of, uh, basically results that we have shown? There could be a possibility of maybe, uh, overshooting that uh, range.
Speaker Change: So we don't guide for margins, unlike some of our peers. Uh we uh have in the past share that there is an aspirational brand of 17 to 17 and a half. If you look at quarter 1, we've landed somewhere, bang in the middle of that band. But looking forward, you know, uh,
Speaker Change: A focus is going to be conversion of some of these Mega real wins. That we've had large deal wins that we've had.
Speaker Change: And some of these last days will come with upfront Investments and lower margins, right? So there are going to be pressures that are going to get created. Uh, we will have to offset them through better, operational rigor and a lot of levers that are there at our disposal, but it is going to be a work that cut out for us and uh, that's all I can share at the moment. Uh,
Speaker Change: About got it, got it. So, just last, follow up on that. So, I mean, with all the headwinds in place of these large resol, we still aspire to maintain our margins in the 727.5% band range.
You know, I I said that, you know, we this is what we deliver in q1, they've done well in order to improve our profitability. For now the, uh,
Speaker Change: You know, our number 1 priority would be growth.
Good got it. Got it. Got it. I was just trying pushing my luck. Thanks a lot for taking my questions and wish you all the best.
Speaker Change: Thank you.
Speaker Change: Thank you. Next question, is from the line of Ravi men. And from my query, please go ahead.
Speaker Change: Hi, thanks so much. Uh, and congrats on very strong deals. Uh, see you just a bit confused about the commentary in America. As you know, you sounded very optimistic about the pipeline there and the strength of demand. Uh but when you uh went by the industry by industry segment, it didn't really. Uh it's not a more mixed uh with manufacturing retail uh cpg. All
Yeah, you're calling about some weakness there, so could you talk a bit about uh, the Americas? Uh, and then also, uh, talk about the decline in Europe, this quarter, if that's, uh, very temporary and you're expecting a bounce back there.
Speaker Change: Uh, sure Robbie. Let me take it 1 at a time. So if you look at uh, the sectors in the US, uh we have pfsi and like I said that pfsi the current pipeline where is very strong and steady. Having said that the in quarter 1, we want to Mega deals which are very strategic for us as a client and also for the client bringing in the the power of AI, and bringing, in the power of our, you know, execution capabilities, if you will. So, in that context in the, in the US pfsi, I see a positive traction.
Speaker Change: Second is uh, technology and Communications which is another sector of ours. They again um, if you look at it Ravi you know we won a large deal, which is likely to be a mega deal. And, uh, we we, you know, we are staying focused on that because both technology clients and also communication clients. They are investing heavy in AI because they want to modernize their current software and platforms, which is 1 of our core. And also it's a it's also a strength because it's coming through our engineering domain so that uh, that sector will continue to be positive for us.
Speaker Change: Third. Uh, in terms of healthcare Healthcare traditionally. In the US, we played a big role in the payers providers and life sciences and that had continued to grow and we see that to continue to grow and also some of the uh, industry Solutions around payers that we have built actually, is resulting in a good opport. Good differentiation and wins for us in the healthcare sector.
Speaker Change: You know, we are staying close to what's happening in the US economy, how the terrorists will play, and how this, uh, this particular business will come, you know, keep keep changing or evolving.
The last 1 is energy, manufacturing and resources in that uh you're right. Manufacturing has been slow for us and we continue to stay focused because especially in the automotive segment. I think you know we have we have seen the challenges that companies are going through. But we are also looking at opportunities, where we can help them in the context of cost takeouts, and that's something that, you know, we probably, we discussing with those customers. So that's how the US and the sectors are playing out now coming to Europe. Right. You know, the the pipeline continues to be strong strong uh, in Europe and in the bfsi sector on our specifically in Europe. We have a good Pipeline and having said that the large Phoenix deal that we won in quarter 4, we are going through the final planning phases. And actually, the revenue will start coming in quarter 3. That can give a good momentum for a for us in Europe. Second, uh, we also are staying focused on some of these deals which are
Speaker Change: Are not cost checkouts and vendor consolidation and, you know, we'll, you know, we have wins now, we have stories. Now, we have strength. Now, we will go back and, you know, bring that to bear in Europe while the market in Europe is definitely uncertainly. We have a good view on what's happening in each of the countries and, uh, know, across the Europe European Union. But what is more important for us is staying focused on those clients. And, you know, do the turnaround for us in Europe, which has uh, not been great in the last couple of quarters. But I'm very confident with the team that we have put together the energy and the enthusiasm, they're bringing in and the pipeline, they have will get there.
Speaker Change: Thanks for details. See and I have a quick question on this restructuring cost of 2.4 billion. Uh you know this is showing up, I guess as an allocated cost, uh, in the segmental reporting, right? And whenever we had something like this earlier, there was a detailed footnote explaining what is restructuring was due to and whether we were taking impairment charges, could you talk a bit about what's the restructure and charge this quarter?
Speaker Change: The restructuring costs pertain to uh, you know, restructuring in Europe that we did, because this very limited to a few Associates in Europe. And this is 1 of in nature and unlikely to record
Speaker Change: And you're right. It is a part of the reconciling items and uh uh, it's a part of our EPs and our net income.
Speaker Change: Okay, thanks so much best 1. Thank you.
Speaker Change: Thank you.
Speaker Change: Next question is from the line of manik Tana from Access Capital. Please go ahead.
Manik Tana: Hi, thank you for the opportunity and once again uh congratulations on the, on the on some of the internals that you've shown. I had a question with regards to
Manik Tana: uh some of the challenges that we've seen in Europe while the Fenix large deal will help us and possibly you're talking about a strong pipeline there, but if you could talk about
Manik Tana: Some of the customer specific challenges that you've had in Europe. All the course of last. Several quarters, are they largely behind us? That's question. Number 1. The second thing is that while we continue to essentially defend, uh, defend our business within our top customers, and which also reflects in, uh, in the revenue performance within top customers but our client metrics seem to essentially, uh, convey some sort of a weakness. If you could just talk elaborate as to what may be causing that those would be the
Speaker Change: Sure manik. Um,
You know, in Europe, uh, we have said that it's a combination of both the macroeconomic environment, the discretionary spend environment and a few clients specific challenges.
Speaker Change: Client specific challenges are now behind us.
Speaker Change: Uh, you know to say when would you are a bottom out and start performing? We do feel confident that in the second half of this financial year, we should start seeing some stabilization and growth in Europe. Uh 1 uh, certainly because of uh the Phoenix deal win. Uh, also because we feel some of these clients specific issues are behind us.
Speaker Change: Uh, more to be done, more is desired. Uh, I think shiny has spoken about a good pipeline, we will continue to remain focused on converting those pipelines and also remaining very close to our top clients in that region.
Speaker Change: Uh, what was your, uh, second question, man. Can you just remind me?
Speaker Change: Performance.
Speaker Change: So, while that looks at us. Yeah, yeah.
Speaker Change: Yeah, yeah. I I now recollect your question. So yes, in some sense if you look at the total number of active clients that has come down over a period of time. Again, reflects discretionary spend environment, there's nothing strategic or intentional that we are doing in order to reduce any number of clients. But it's also uh a very very uh uh uh you know we we continue to also win
Speaker Change: You know, the hunting logos, right? The big circle accounts, where we would like to expand. That's something that we are doing, and we will continue to accelerate that momentum, but we also investing a lot in our large accounts.
Speaker Change: And in some sense, you should look at our, uh, greater than 50 million dollar accounts. We've actually grown quarter on quarter. We should continue to see momentum in in, uh, our what we call as metal accounts and you will see that, uh, performance reflected their
Speaker Change: Sure, thank you and have a good rest of the future.
Speaker Change: Thank you.
Speaker Change: we'll take our next question from the line of Kumar Rakesh from BNP paraba, please go ahead
Speaker Change: Hi, good evening, and thank you for taking my question. I just 1 question more of a clarification. So it seems like on March and earlier when used to talk about that, it will be in a narrow band for
Speaker Change: You seem to be focusing more on driving Topline growth. Um, earlier, she had talked about that, uh, the priority would be on profitable growth. And you have spoken about that the second half performance would be stronger than first half. Will you say that would also be reflecting in the bottom line growth as well? Will that also be better than the first half?
Speaker Change: Uh, for either the full year revenues or uh, uh, you know, the, uh, profits, right? Yes, we've, uh, in the last few quarters, we've been talking about narrow bands in the last 8 quarters. Uh, We've consistently improved right? Uh, our margins and we've also created a good runway for us to invest back into our business.
Speaker Change: And, uh, the deals that we have secured are in our large client relationships, and, uh, you know, they will need certain Investments that we will have to make up front. And, uh, you know, we will go ahead and make what it, uh, and focus on growth and execution eventually. Yes. This will, you know, result in, uh, profitable growth
Speaker Change: Got it. Thanks for that. The only reason I was trying to ask this question was to understand, what could be the, uh, the bottom format. And if you're investing, is there something you would want to put on earlier? We have seen during this period earlier period, when we were focusing on driving growth margin, had even Fallen to 15% out of our level. So is there a scenario in which for a few quarters, we could see similar contraction in margin, where we are, jumping up the deal and hence, could have any. Yeah, right now, we're not sharing any commentary on that. Uh, you know, like I said, we will now focus on this execution. We are in a good place as far as margins are concerned in q1. Uh, we will take it from there and we will certainly keep the market posted, as some of these deals will start to ramp up. Uh, what we are able to offset, how we are able to look at some of those pressures being offset. And then we will keep you posted accordingly.
Speaker Change: Sure. That would be great. Thanks.
Speaker Change: Thank you.
Speaker Change: We'll take our next question from the line of sudhir. Golly from kotak Mahindra, AMC. Please go ahead.
Sudhir Golly: Uh, uh, yeah. Hi, uh, congrats on a good quarter and strong deal then. Uh, first question on the bills and Friends, uh, compared to the long term trend line of mix between like, you know, beans and renewals has this quarter, seen any material Divergence, maybe in terms of skew towards renewal.
Sudhir Golly: No, I don't think so. In fact we have a good good mix of both renewal and and with an element of expansion in both the mega deals that we spoke of
Uh, 1 large deal where we have a potential to make. It Mega has a substantial portion of new in it. So, uh, I think when you look at overall large deals, I think the mix of renewal and new is quite evenly poised. And, uh, in some sense, uh, we excited about the booking
Sure. So so it is similar to what we had seen in the previous, uh, few quarters, right?
Sudhir Golly: Have a nice talking about. These are all global companies. These are companies where we have a footprint. So the good news is that we have secured our current book of work and now we are getting a new book of work. The focus for us is how do we maximize the new book of work? And we are working through the planning process and uh we will stay focused on executing those uh, those uh deals. And it's, it's a, it's a, it's a very, very intense. Focus on execution and delivering to our clients.
got it, sir and
Speaker Change: In your personal, you mentioned that the customer refunds are coming back in pocket. Uh even if it is not in the uniform passion, uh so can you elaborate on which pockets are those with specific geographies and uh vertical depart from the BSS? Which you spoke about
Speaker Change: See see. Uh, so so the broadly, if you look at it, uh, the discretionary spend, uh, is coming around
Speaker Change: Uh, data Ai and modernization and uh to just give you a little bit of a color around that, for example, uh you know we are, we have won a deal where we are transforming of, you know, for a particular retailer, we call it as a fashion intelligence, right? Uh, now ai will know what to sell, and this is the the large American fashion brand. Uh, they want to enhance the sales by identifying and optimizing uh, 40 product features for
Speaker Change: Item.
Speaker Change: So how do you display these features? Right, whether it's in terms of the differentiation of the product intelligently, extracting and analyzing the impact on the markets performance and also helping uh, their, you know, sourcing team on the Strategic product decisions that they have to take to buy it. So, that's 1 example of a discretionary spend, which is, of course, integration of data and AI, right there. Are, there are so, similarly, you know, 1 of the
Speaker Change: Financial services company, you know, we are working with them on the power of intelligent Automation and what we call it as smart grid decisions, right? This is, uh, you know, you know, right now the client has a lot of manual credit risk, cooperations. They're looking at it, you know, uh, how can we make this more EI and so that it is less uh, error phone and also it's more accurate, right? So that they can disrupt the existing workflows. So, these are the projects, uh, that are that are very important need of the business. And that's a discretionary spend. I talked about entirely 2, different sectors, but those are the just to give you a context around that today.
Got it sir. Thank you and all the best.
Speaker Change: Thank you.
Speaker Change: Next question is from the line of sepia from Equity Securities. Please go ahead.
Speaker Change: Yeah, thanks. Thanks for the opportunity and congrats on Deal wins traction. So first question is uh when we say when we execute these Mega deals, there could be a margin pressure because of the accent investment. So wanted to understand the nature of the investment and the margin pressure is it more corporative pricing? Because our ebit margin is already lower than versus most of the other periods. So just want to understand and second these deals also involve some amount of higher pass through sales or these are normal, traditional type of deals.
Speaker Change: so s first and foremost, none of the deals are the part
Speaker Change: Second when upon us said that we have to invest into these deals. You know this is the time for us to do the planning process because let's say when there is a vendor consolidation the kind of the teams that we need to put together both in terms of program management program, delivery and board management and so on so forth, you've got to get the talent first, get them all settlements, the customers environment and the process that they do. So these are all the Investments that you know upon I is talking about nothing to do with the past or something.
Speaker Change: Okay, okay, and any comment on pricing, are you believing? The competitive pressure is very high because of macro everybody is now behind growth, uh, even in the large cap basket. So sep like up said, right? Some of these large steel wins are very competitive.
Speaker Change: There will be price pressure from that. What matters is, you know, how do you transition and how do you uh, you know, execute these deals. And if you look at the current demand environment, um uh I would say that each of these deals are extremely strongly contested.
Speaker Change: And this is how, you know, the industry has always functioned. Uh, so we and everybody has to innovate. We have to generate more savings and, uh, continue to stay competitive.
Speaker Change: Okay. Okay, and you also mentioned, we have to offset this, uh, with the new levers and you believe there are more levers. So can you elaborate on the same? Because your margin execution has been really excellent, which has Juiced out heroin, many of the margin levers. So, what are the pending levers, which you believe can help you to offset some, some of these pressure.
Speaker Change: I think, uh, you know, productivity in fixed price programs. Uh, they continue to be a theme. I know we talked about it all the time, but, uh, you know, and with a newer technology with a lot of AI Focus, the productivity that we can drive. Uh, certainly a big lever. Secondly, uh, even um, as we speak, you know, there is, uh, margin Improvement that we can make in some of our acquired entities and businesses. As you know, they, uh, go from strength to strength, they they will be Improvement in margins, that they are all executing to thirdly, if I had to look at it, um, We are continuing to optimize our DNA again on the back of, uh, AI on the back of uh, a lot of, uh, process efficiencies that we are driving that will continue to be a focus or simplification.
Speaker Change: And uh, reducing the number of layers, these have remained uh something that we've uh and we continue to focus on some of those levers.
Speaker Change: Apart from this, the traditional Focus will remain utilization. We've invested in, maybe we will need to continue to invest in utilization for a little bit more. But, uh, there are other factors like freshers hiring, rotation, pyramid, optimization, all of which we come easier as we, uh, grow. And then more programs. And that's also something that will continue to operate as a lever.
Speaker Change: Um, and over and above that, uh, you know, we, uh, Forex is something that has traditionally helped, that's something that is not within our control, but that is always something, uh, that, uh, has played out.
Speaker Change: In the past as well.
Speaker Change: So, thank you and all the best.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: We'll take our next question from the line of Ashwin. Mehta from Ambit Capital, please go ahead.
Ashwin Mehta: Yeah, thanks for the opportunity. Uh so shame me in terms of uh, the competition that you have 1 day is deals against who are the incumbents here was it, largely the Indian providers or these were mostly mncs.
Speaker Change: Ashwin, I never
Speaker Change: Talked about competition or name them all? I can tell you, uh, Ashwin is these were
Speaker Change: Well, for deals, very satisfying at the end of the day, Ashwin.
Speaker Change: Okay, thanks and just, uh, 1 follow up. So, so given our commentary that Capco is growing at around 6% from a Wii perspective. Uh, the BFF portfolio X of Capco seems to have declined by 6 to 7%.
Speaker Change: Uh so what exactly driving that is? It largely rammed down at clients, is it uh uh some share loss? Uh so any any color here?
Sheni: I think these are largely ramp Downs that have happened. Uh, we've had spoken about even within bfsi, I think America is much stronger. Asia Pacific has also had a much stronger growth in bfsi. The weakness is also largely emanating from Europe, um, and uh, you know, we we're very confident based on the real wins. Uh, and the bottom ring out of some of the uh, uh, client specific issues that we can look to stability and growth. Uh you know, sheni is spoken about 2, Mega deal wins in the FSI. Uh, Phoenix is certainly in the same space that we that we had won in Q4.
Speaker Change: so,
Speaker Change: So the second half onwards things look more optimistic, uh all focused on execution.
Uh, and just to follow.
Speaker Change: Just to follow, in terms of the restructuring charges that we have taken, are they, uh, segments specific or, uh, they're across the board in Europe?
Not Material in the context of the overall business.
Okay, thanks a lot and all the best.
Speaker Change: Yeah, Yes, actually uh, we can now close the call.
Yes.
Speaker Change: So since we take that as the last. Yeah, I just think, you know,
Speaker Change: Yeah.
Speaker Change: So, thank you all for joining the call in case we could not take any questions due to time constraints.
Speaker Change: Please feel free to reach out to the investor relations team. Have a nice evening. Thank you.
Speaker Change: Thank you on behalf of with Pro limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.