Brokerages are reevaluating their positions on Wipro following disappointing revenue figures for the March quarter and a cautious revenue forecast for the first quarter of FY26. The IT services giant cited ongoing macroeconomic challenges and hesitance from clients as key factors impacting their outlook.
Downgrades and Adjusted Price Targets
Nuvama Institutional Equities has revised Wipro’s rating to ‘Hold’ and reduced its price target from ₹300 to ₹260. According to the brokerage, “As macro conditions rapidly worsen, leading to uncertainty in discretionary spending, Wipro’s valuation aligns closely with that of its competitors like TCS, Infosys, and HCLTech. This means the previous assumptions about Wipro’s performance no longer hold.”
Continued Caution from Analysts
Motilal Oswal Financial Services has maintained a ‘Sell’ rating on Wipro, adjusting its target price to ₹215. They pointed out that “the Q1 guidance indicates a temporary halt in client budgets, as spending trends worsened at the close of Q4, which could further impact Q1 results.” This sentiment reflects broader apprehensions regarding client behavior in the current economic climate.
Market Reaction
On Thursday, Wipro’s stock took a hit, plummeting over 5% intraday on the National Stock Exchange, ending the day at ₹237.40. This decline mirrors the growing concerns among investors regarding the company’s future performance amid a challenging economic backdrop.
Cautious Client Behavior
Emkay Global has also adopted a ‘Reduce’ rating for Wipro, lowering its price target to ₹260. They noted a trend of hesitant client behavior, characterized by delays and pauses in several projects due to heightened macroeconomic uncertainties and recent U.S. tariff announcements. The brokerage emphasized that ongoing macro and geopolitical uncertainties contribute to a lack of predictability in the near term.
Weak Q1 Guidance
Elara Capital echoed similar sentiments, stating that the guidance for Q1FY26 remains weak. They revised their target price down to ₹210 from ₹250 while maintaining a ‘Sell’ recommendation. They emphasized that uncertainty surrounding tariff announcements is causing clients to adopt a more cautious approach to technology spending.
Deal Intake vs. Revenue Conversion Concerns
Despite reporting a deal intake of approximately $3.9 billion for the quarter—an increase of 12.5% quarter-on-quarter—brokerages are concerned about the conversion of these deals into revenue. Motilal Oswal remarked that while the total contract value (TCV) was robust, potential delays and cancellations could hinder revenue realization. They noted, “Although Wipro has excelled in maintaining margins at 17.5%, further improvements may be limited.”
Sector Performance Insights
Wipro’s largest vertical, BFSI (Banking, Financial Services, and Insurance), saw a slight revenue increase of 10 basis points quarter-on-quarter. However, the consumer sector experienced a 10 basis points decline. In contrast, the energy, manufacturing, and resources sectors enjoyed a 40 basis points growth. Meanwhile, contributions from technology and communication as well as health sectors fell by 10 basis points and 30 basis points, respectively.
Conclusion
In summary, Wipro faces significant challenges as it enters FY26, with analysts expressing skepticism regarding its revenue potential and market position. The company’s performance in the coming months will be closely monitored as it navigates these turbulent economic waters. Investors are advised to stay informed about the evolving landscape to make educated decisions regarding their investments in Wipro.
