Synopsis
Wipro’s share price fell 4% after the company reported a 2% year-on-year decline in fourth-quarter profit to ₹3,502 crore, despite announcing a ₹15,000-crore buyback. Revenue rose 8% year-on-year, but the core IT services business remained sluggish with minimal growth, reflecting weak demand. Margins also declined slightly, a sign of continued cost pressures, even as profits improved on a sequential basis.
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AgenciesShares of Wipro fell after the company reported a 2% year-on-year decline in fourth-quarter profit to ₹3,502 crore, despite announcing a ₹15,000-crore buyback.Actions of WiproIndia’s fourth largest IT services company, fell as much as 4% to its day low of Rs 202 on the NSE on Friday after reporting a 2% decline in its consolidated net profit to Rs 3,502 crore in the fourth quarter. The company’s board also approved a buyback of Rs 15,000 crore along with its financial results.
Operating revenue, meanwhile, grew 8% year-on-year to Rs 24,236 crore. However, the core IT services segment showed limited traction. Revenue was $2.65 billion, growing just 0.6% quarter-over-quarter and 2.1% year-over-year. On a constant currency basis, IT services revenue increased 0.2% sequentially but declined 0.2% year-on-year, highlighting weak underlying demand.
Wipro reported a sequential rise in profit, up 12% quarter-on-quarter. IT Services operating margin was 17.3%, down 0.3% sequentially and 0.2% year-on-year, indicating continued cost pressures and slowing investment.
What do the experts say?
Wall Street major Morgan Stanley maintained an underweight rating and reduced its price target to Rs 192 from Rs 242, a decline of almost 9%. The brokerage reported a weak performance in the fourth quarter, with revenue down 1.3% quarter-on-quarter at constant exchange rates. It also highlighted a 1.6% year-on-year decline in FY26 revenue, reflecting underperformance compared to peers. The outlook remains gloomy, with forecasts for 1Q27 indicating a further decline of 1.5% to 2% quarter-on-quarter.
Even though margins have held up so far, they are expected to remain below the 17%-17.5% range in FY27. The company also noted the Rs 15,000 crore buyback as favorable to shareholder returns, but lowered its revenue and margin growth estimates for FY27 and FY28, expecting continued relative underperformance and valuation discount compared to peers.
Goldman Sachs reiterated its sell rating with a target price of Rs 187. It highlighted a weaker-than-expected performance in the fourth quarter and said forecasts indicate continued revenue contraction in the near term. The brokerage expects FY27 to mark the fourth consecutive year of revenue declines for Wipro and has reduced its revenue and profit estimates following the results. He also noted that the comment was neutral in scope for the IT sector at large.
Nomura maintained a more constructive stance with a buy rating and raised its price target to Rs 250 from Rs 240, describing Q4FY26 as a mixed quarter. Contract wins remained stable, with total bookings of $3.5 billion in the fourth quarter, down 13% year-over-year, including large deals worth $1.4 billion, down 18% year-over-year. The pipeline continues to be driven by vendor consolidation, cost optimization and growing demand for AI-driven transformation. Nomura believes that timely execution of these transactions will be key to improving growth and expects dollar revenues to increase by 0.9% in FY27 and 4% in FY28.
Motilal Oswal has maintained a neutral rating on Wipro with a price target of Rs 215, implying a modest upside of around 2%. The brokerage expects constant currency revenues to increase around 1.0% YoY in FY27, factoring in a weak start to the year, with Q1 FY27 revenue likely to decline around 1.0% QoQ. It highlighted persistent challenges such as delays in transaction ramp-up, declining contribution from key customers, and weaknesses across key verticals. The company also believes that margin expansion opportunities are limited due to wage increases, more low-margin deals and continued investment in AI. He largely kept his estimates unchanged.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
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