Kumar Rakesh

Kumar Rakesh from BNP Paribas questioned the Q3 FY26 guidance, noting that despite strong deal wins and positive tailwinds, the midpoint suggested only marginal growth. He asked about potential headwinds and the impact of furloughs. He also sought to reconcile the company's intention to maintain margins in a narrow band with previous comments about large deals being margin dilutive.

Answer

Aparna Iyer, CFO, Wipro, stated that the guidance reflects current visibility, with the positive midpoint being a first step towards improved momentum as large deals convert. Regarding margins, Ms. Iyer reiterated the goal to keep them in the 17-17.5% band, acknowledging that competitive large deals can be initially margin dilutive but improve as productivity is realized. She also mentioned the anticipated 60 basis points dilution from the Harman Digital Transformation Solutions acquisition.

Kumar Rakesh questioned Wipro's Q3 growth guidance, which indicated only marginal improvement despite strong deal wins and the Phoenix deal ramp-up. He sought to understand the specific headwinds impacting growth and how the company plans to balance margin dilution from large deals with its stated goal of maintaining margins in a narrow band.

Answer

Aparna Iyer, CFO of Wipro, clarified that the Q3 guidance reflects current visibility, with the positive midpoint being a first step towards improved momentum as large deals convert to revenue. On margins, Ms. Iyer reiterated the aim to keep adjusted operating margins in the 17-17.5% band. She acknowledged that intensely fought vendor consolidation deals and the Harman DTS acquisition (expected 60 bps dilution) would create margin pressure, but Wipro is implementing initiatives to offset these investments and maintain margins in a narrow band for Q3.

Kumar Rakesh of BNP Paribas asked for clarification on the company's priorities, noting a potential shift from 'profitable growth' to focusing more on top-line growth. He questioned if the stronger second-half performance would apply to the bottom line as well and probed for a potential floor for margins during the investment phase.

Answer

CFO Aparna Iyer reiterated that Wipro does not provide full-year guidance for revenue or profit. She stated that while the company has consistently improved margins, the current priority is to invest in and execute the recently won large deals to drive growth. She acknowledged these investments are necessary but did not provide a specific margin floor, stating the focus is on execution and they will keep the market posted on how margin pressures are being offset.

Kumar Rakesh highlighted a contradiction between positive indicators like strong bookings and a weak growth guidance. He also asked for a long-term view on why Wipro is underperforming peers and facing a potential third year of revenue decline.

Answer

CFO Aparna Iyer cited ongoing weakness in Europe and softness in consumer and manufacturing sectors for the weak guidance. CEO Srinivas Pallia added that clients are delaying large projects due to uncertainty. He identified the turnaround of the European business as the central challenge and key to improving Wipro's overall performance, while noting that the Americas business grew 1.2% in FY'25.

Kumar Rakesh from BNP Paribas inquired about Infosys's strategic partnerships with companies investing in AI data centers, specifically regarding future monetization, enterprise implementation, and modernization opportunities. He also asked about the margin comfort for recent large deals, given the trend of vendor consolidation.

Answer

CEO Salil Parekh confirmed Infosys's active partnerships across various AI layers (chip to deployment) and highlighted enterprise modernization as a significant growth area, with AI tools improving ROI. He emphasized Infosys's role as a key partner for AI companies due to leveraging client landscape knowledge. Regarding large deal margins, Mr. Parekh stated a disciplined approach ensures margin profiles are maintained, though specific margins are not disclosed.

Sought clarification on whether the guidance revision was purely due to macro assumptions, asked for details on the Q1 pricing and productivity benefits, and inquired about the drivers and sustainability of Europe's strong growth.

Answer

Management confirmed the guidance change is due to the macro environment not improving, not operational issues. The 70 bps margin benefit in Q1 was attributed to both Project Maximus and seasonality. Europe's outperformance was credited to early investments, winning large deals, and the region's increasing openness to outsourcing, with a continued strong pipeline.

Kumar Rakesh from BNP Paribas S.A. sought clarification on whether the guidance revision was due to macroeconomic assumptions or operational factors. He also asked for details on the 70 bps pricing benefit and the sustainability of Europe's strong growth.

Answer

CFO Jayesh Sanghrajka confirmed the guidance change is tied to the macro environment not improving as previously hoped for the upper-end scenario. He attributed the 70 bps benefit to 'Project Maximus' and seasonality, and noted Europe's outperformance is driven by past investments and large deal wins, with a continued strong pipeline.

Kumar Rakesh from BNP Paribas asked about the volume trends during Q4, the expected contribution from third-party revenue in FY'26, and the long-term risk of clients reassessing low-ROI projects if macroeconomic uncertainty persists.

Answer

CFO Jayesh Sanghrajka stated that Q4 volumes saw a soft start in January but recovered through the quarter. He clarified that third-party revenue is expected to be lower in FY'26 than in FY'25. CEO Salil Parekh noted that while recently signed deals are on track, a significant deterioration in the economic environment could lead clients to re-evaluate discretionary spending, though this is not happening significantly at present.

Kumar Rakesh inquired about the traction of the Topaz generative AI platform compared to the initial rollout of the Cobalt cloud platform, and asked about the market positioning of Infosys's new small language model.

Answer

CEO Salil Parekh explained that comparing Topaz to Cobalt is difficult as enterprise GenAI adoption is in its early stages. He highlighted that Topaz is being deployed via enterprise platforms, multi-agent frameworks, and is a key productivity component in nearly every large deal. Regarding the small language model, he positioned it as a foundational layer, trained on Infosys and industry data, upon which clients can build specific business applications, serving as both an accelerator and a base for new solutions.