Abhishek Kumar

Abhishek Kumar from JM Financial asked whether the overall book of business for renewal and renewal-plus-scope-expansion deals is growing, or if deflationary pressures are offsetting new scope. He also inquired about the timing difference between new scope increases and near-term deflation in renewals, and the impact of a recent client bankruptcy on Q2 and Q3 revenue.

Answer

Aparna Iyer, CFO, Wipro, explained that net new deals directly add to revenue. For renewals, productivity gains are passed on, but Wipro often secures new projects, especially around AI adoption. Renewal-plus-expansion deals typically lead to an increase in booking/revenue value. She confirmed that timing differences can impact short-term versus long-term revenue realization from these deals. Ms. Iyer clarified that the client bankruptcy had no impact on Q2 revenue, with a provision for bad and doubtful debt affecting G&A/expected credit loss instead.

Abhishek Kumar asked about the impact of renewal and renewal-plus-scope-expansion deals on Wipro's overall book of business, specifically whether deflation in renewals offsets new scope. He also inquired about timing differences between new scope and deflation, and the revenue impact of a recent client bankruptcy.

Answer

Aparna Iyer, CFO of Wipro, explained that net new deals directly add revenue. For renewals, standard productivity gains are passed on, but clients often reinvest these savings into new projects, particularly AI adoption. Renewal-plus-expansion deals typically lead to an increase in bookings/revenue value. She confirmed that timing differences between new scope increase and near-term deflation in renewal deals can impact short-term results. Ms. Iyer clarified that the client bankruptcy resulted in a provision for bad and doubtful debt (50 basis points impact on margins) but had no impact on Q2 or expected Q3 revenues.

Abhishek Kumar from JM Financial Ltd inquired about the nature of Wipro's strong deal wins, specifically asking if longer deal durations were inflating Total Contract Value (TCV) relative to Annual Contract Value (ACV), and questioned the company's capital allocation strategy, asking if the recent preference for dividends over buybacks is a definitive shift.

Answer

CFO Aparna Iyer confirmed that TCV is growing faster than ACV due to longer tenors on large cost-takeout and vendor consolidation deals, which are currently dominating the deal pipeline amid weak discretionary spending. Regarding capital allocation, she stated that while recent payouts have been dividends, buybacks remain an option for the company to consider at an appropriate time, in line with the policy of returning over 70% of net income to shareholders.

Abhishek Kumar questioned the weak conversion of strong deal bookings into revenue growth over the past two years, asking if cancellations or longer deal tenures were the cause and whether client-specific ramp-downs are now concluded.

Answer

CFO Aparna Iyer attributed the lag to the timing difference between large deal signings and their subsequent revenue ramp-up, noting that ramp-downs in discretionary projects offset some gains. CEO Srinivas Pallia added that negative sentiment from tariff hikes in Q4 caused clients to pause projects and reduce volumes, describing the situation as a 'transitional phase'.

Abhishek Kumar inquired about Wipro's Q3 guidance, asking if the muted forecast was primarily due to seasonal furloughs or also reflected ongoing client-specific challenges. He also sought clarity on the performance of the Energy & Utility (E&U) vertical and when the company expects client-specific ramp-downs in that sector to conclude.

Answer

CEO Srinivas Pallia and CFO Aparna Iyer confirmed that the Q3 guidance is impacted by furloughs, fewer working days, and a slowdown in Europe due to client-specific issues. They stated that the E&U vertical is a 'work in progress' with a focus on converting a pipeline of vendor consolidation and cost takeout deals. Management noted that the impact of known ramp-downs is already factored into the Q3 guidance.

Abhishek Kumar from JM Financial questioned Infosys's second-half outlook, considering seasonal factors, strong deal wins (including a $1.6 billion mega deal), and whether the implied guidance decline reflects conservatism or other limiting factors. He also asked about the mega deal's expected ramp-up timeline and its net new contribution.

Answer

CEO Salil Parekh explained that guidance is based on various models to ensure transparency, with the lower end reflecting elevated uncertainty and the upper end a stable environment. He noted that H2 is seasonally softer due to fewer working days and furloughs, and Infosys's stronger H1 performance compared to peers naturally impacts the H2 outlook. Mr. Parekh confirmed the $1.6 billion mega deal is 100% net new and will begin ramping up this fiscal year.

Abhishek Kumar of JM Financial Ltd. asked about the vendor consolidation trend, questioning if Infosys is now competing more with larger peers, creating margin pressure. He also asked why Infosys expects a weaker H2 compared to H1, contrary to peers.

Answer

CEO Salil Parekh stated that in vendor consolidations, Infosys competes with a range of firms and benefits from its strengths in enterprise AI and delivery, with pricing focused on standard productivity improvements. CFO Jayesh Sanghrajka explained the H2 outlook is based on normal seasonality following a strong H1 performance.

Abhishek Kumar from JM Financial asked if the third-party items that spilled over from Q4 would be recovered in Q1, how Q1 visibility compares to the previous year, and why the margin uplift from lower third-party costs was limited.

Answer

CFO Jayesh Sanghrajka stated it is uncertain if or when the slipped third-party deals will return, and that overall third-party revenue is expected to be lower in FY'26. He compared current uncertainty around tariffs to last year's concerns over interest rates. He explained the limited margin uplift (20 bps) is because it only reflects the delta between the company's overall margin and the lower margin on those specific third-party deals.

Abhishek Kumar sought to clarify the nature of the smaller deals, asking if they are concentrated in specific subsectors or are non-discretionary purchase orders. He also asked for a quantification of the margin impact from upcoming wage hikes.

Answer

CFO Jayesh Sanghrajka stated that the increase in smaller deals is broad-based across various verticals and deal types but declined to provide a more granular breakdown. He also confirmed that the company would not be quantifying the specific margin impact of the phased wage hikes, only that they would occur effective January 1 and April 1.