Sandeep Shah

Sandeep Shah from Equirus Securities inquired about the guidance assumption for the second half, specifically if it anticipates further lower third-party item sales compared to the first half, and if the usual Q3 seasonal strength in this area is not expected. He also questioned the rationale behind deploying 8,000 net new employees in Q2 despite anticipated seasonal softness.

Answer

CEO Salil Parekh confirmed expectations for lower third-party sales this year compared to last, with no unusual growth or elevation anticipated in Q3. Regarding employee additions, Mr. Parekh attributed the 8,000 net additions and onboarding of 12,000 freshers to the demand and supply environment, current 85% utilization, and overall business visibility.

Asked if TCV can be expected to remain healthy due to vendor consolidation, what could trigger a rebound in discretionary spending, and whether EBIT margins can still improve year-over-year despite a lower Q1.

Answer

Management did not provide a TCV forecast but confirmed a healthy large deal pipeline. They have no specific timeline for a discretionary spending rebound. They affirmed the aspiration to improve margins year-over-year remains, with levers like Project Maximus and lower third-party costs expected to help in the coming quarters.

Sandeep Shah of Equirus Securities Pvt. Ltd. asked if the strong vendor consolidation trend could lead to continued healthy TCV in coming quarters. He also inquired about triggers for a discretionary spending recovery and the path to improving EBIT margins year-over-year.

Answer

CEO Salil Parekh noted the large deal pipeline is in a good place but declined to give a forward-looking view on TCV value. CFO Jayesh Sanghrajka stated the aspiration to improve margins for the full year remains, with tailwinds from Project Maximus and lower third-party costs expected to help offset headwinds from deal transitions.

Sandeep Shah of Equirus Securities asked if the uncertain macro environment is driving more client discussions around cost takeout deals, whether the typical 1H vs. 2H seasonality will persist in FY'26, and for clarification on a one-off M&A cost.

Answer

CEO Salil Parekh confirmed that this type of environment typically provides more cost takeout opportunities and Infosys is proactively positioning its portfolio accordingly. CFO Jayesh Sanghrajka expects normal seasonality to continue but noted uncertainty makes quarterly predictions difficult. He also clarified the 40 bps M&A-related charge in Q4 was a one-off reassessment of customer intangibles.

Sandeep Shah asked if the double-digit increase in the smaller deal pipeline is broad-based across verticals and if this trend could be a precursor to stronger demand in calendar year 2025.

Answer

CFO Jayesh Sanghrajka confirmed that the increase in the pipeline for deals below $50 million is indeed broad-based. However, he cautioned that while it's an important data point reflecting a potential change in discretionary spending, it is too early to determine if it will become a sustainable trend predictive of future revenue.

Sandeep Shah of Equirus Securities Pvt. Ltd. asked for details on the margin pressure from large deals, questioning if it's due to competitive pricing. He also inquired about the remaining levers Wipro can use to offset these pressures, given its already strong margin execution.

Answer

CEO & MD Srini Pallia explained that investments for large deals involve talent acquisition and program management setup, not pass-through costs. He confirmed that large deals are highly competitive, which can create price pressure. CFO Aparna Iyer detailed the remaining margin levers, including driving productivity with AI in fixed-price projects, margin improvement in acquired entities, G&A optimization, and traditional levers like utilization, pyramid optimization, and rotation, which become easier to manage with growth.

Sandeep Shah asked CEO Srini Pallia to identify the key internal factors, beyond macro conditions, that Wipro needs to rectify for sustainable growth. He also pressed for a timeline on the turnaround for the Manufacturing and E&U verticals and sought clarity on the company's M&A strategy and capital allocation policy regarding buybacks versus dividends.

Answer

CEO Srinivas Pallia reiterated the focus on five strategic priorities, including large accounts and deals, and acknowledged that the Manufacturing and E&U verticals are lagging but have promising pipelines. He declined to provide a specific timeline for their recovery. CFO Aparna Iyer stated that a revised capital allocation policy is being developed and will be shared later, while Srini Pallia described M&A as a key, deliberate part of their strategy, not limited to a 'String of Pearls' approach.