Wipro Limited, one of India’s leading IT services firms, faced a significant downturn in its American Depositary Receipts (ADRs) on April 16, 2025, despite reporting a year-on-year profit growth of 26% for the fourth quarter. The company's ADRs plummeted by 6.7%, trading at $2.63 in New York, as investors reacted to its disappointing revenue guidance for the upcoming quarter.
The decline in Wipro's ADRs was largely influenced by the broader weakness in the U.S. stock markets, particularly the tech-heavy Nasdaq Composite, which was down nearly 2% during the same trading session. This market trend mirrored the sentiment among investors regarding the uncertain economic landscape, especially in the technology sector.
Wipro's earnings report revealed a net profit of Rs 3,588 crore for the quarter ended March 2025, which surpassed market expectations of Rs 3,364 crore. The company's gross revenue also saw a slight increase, climbing to Rs 22,504.2 crore, aligning closely with analyst predictions of Rs 22,684 crore. However, despite this positive earnings surprise, the company's guidance for the next quarter raised alarms among investors.
During an analyst call, Wipro's CEO, Srini Pallia, expressed concerns about the impact of global tariffs on client demand. "Recent tariff announcements have only added to the uncertain demand environment," Pallia stated. He emphasized that while the underlying demand for technology reinvention remains robust, clients are approaching decisions with caution due to the current economic climate.
Wipro's guidance for the IT services segment now anticipates revenue between $2,505 million and $2,557 million for the upcoming quarter, indicating a sequential decline of between 1.5% and 3.5% in constant currency terms. This forecast represents a stark contrast to the company's previous guidance, which had suggested a potential growth range of -1% to 1% for the fourth quarter.
In the latest quarter, Wipro's IT services revenue saw a decrease of 0.8% quarter-on-quarter and 1.2% year-on-year, raising additional concerns about the company's growth trajectory in a competitive market. Investors were particularly disappointed by the forecast, which suggests that the company is bracing for a challenging quarter ahead.
Following the earnings announcement, Wipro's shares on the National Stock Exchange (NSE) did experience a slight uptick, closing at Rs 247.60, an increase of 1.48% from the previous day's closing price. However, this was overshadowed by the significant drop in ADRs on the NYSE, reflecting the disconnect between domestic and international market sentiments.
As Wipro navigates this turbulent period, analysts are closely monitoring the company's strategies to adapt to the evolving economic landscape. The uncertainty surrounding tariffs and their potential impact on IT spending has become a focal point for many investors, particularly those with stakes in Indian tech firms.
Wipro's performance is being scrutinized not only for its immediate financial results but also for how it positions itself amid global economic pressures. The company has reiterated its commitment to innovation and client engagement, stating that it aims to leverage its capabilities to meet the changing needs of its customers.
In light of these developments, Wipro's upcoming quarterly performance will be pivotal in determining investor confidence and the company’s future direction. The IT sector as a whole is facing headwinds, and Wipro's ability to navigate these challenges will be crucial for its long-term success.
Overall, while Wipro's fourth-quarter results showcased impressive profit growth, the company's cautious outlook for the next quarter has raised questions about its ability to sustain momentum in a challenging environment. As the company prepares for the months ahead, all eyes will be on how it adapts to the shifting dynamics of the global market.
