As Wipro gets a new CEO, a look at its woes in four data charts

Srinivas Pallia who replaced Thierry Delaporte over the weekend has an unenviable task to regain revenue momentum, which has hit a low relative to peers without any room to tweak operating margin which is also lowest among top peers.

And, this at a time when clients are in no mood to ramp up big budget transformation deals.

Steering the company back on the growth path amid uncertain short term demand scenario will be the foremost challenge. Wipro had reported a significant jump in the top line and profits during the first year of Delaporte’s tenure helped by key acquisitions and large deal wins.

However, the momentum seems to have fizzled out. An analysis of the trailing 12-month (TTM) revenue in dollar terms (to exclude currency related impact on the relative performance) reveals that Wipro has lost momentum in the 12 months to December 2023 after growing faster than peers in the corresponding periods of 2021 and 2022.

Its TTM revenue fell by 0.8% in December 2023 compared with the single digit growth posted by larger peers including Tata Consultancy Services (TCS), Infosys, and HCL Technologies.

A similar trend is visible for net profit. Wipro’s TTM net profit fell by 12.7% and 4% in December 2022 and December 2023 respectively, the sharpest drop compared with the peers.

On the operating margin front, though each of the country’s top four IT exporters have seen margin erosion, Wipro has reported the highest contraction of 570 basis points between December 2020 and December 2023 quarters. It had the lowest margin of 16% among top peers in the latest December quarter.

This will make it necessary for the new CEO to hunt for projects that do not erode margins further and instead go for those projects that are margin accretive.

The underperformance with respect to revenue, profit and margins has affected Wipro’s stock performance over the past two years. During Delaporte’s first year at the office, Wipro had outperformed peers and the sector index ET Infotech by a wide margin, delivering a two-fold jump.

However, since 2022, the stock has not been able to hold on to these gains amid subdued financial performance. The company’s performance on bourses will be a major barometer that will decide the effectiveness of Pallia’s leadership in the coming years.