Brokerages on Friday highlighted weak growth visibility and execution challenges at Wipro following its January-March quarter results, with several pointing to subdued guidance, delayed deal ramp-ups and continued pressure on organic growth.
Three Years of Stagnation
Jefferies said the March quarter performance missed its estimates, while the company’s guidance of 0% to -2% sequential revenue growth in constant currency terms came as a negative surprise. The brokerage said the outlook reflects continued weakness in demand and limited near-term triggers for recovery. “Wipro has struggled to grow organic revenues for 3 years in a row and FY27 is unlikely to be any different,” the brokerage said, adding that execution remains a key concern.
Citigroup said investors are likely to focus on client-specific issues and delayed ramp-ups that impacted growth in recent quarters. It added that while the company’s guidance includes contribution from two recent acquisitions, the underlying organic growth trend continues to remain weak. “Investors will also consider that the guidance includes contribution from the two recent acquisitions and organic growth continues to indicate weaker trend,” the brokerage said.
Margin Resilience
Motilal Oswal Financial Services flagged potential margin pressure in the near term, driven by investments and deal ramp-ups. The brokerage noted that IT services margins stood at around 17.3% in the March quarter despite the impact of one month of wage hikes and acquisitions. It said the resilience in margins was partly supported by cost controls, but flagged that sustainability remains uncertain.
The brokerage added that margins in the June quarter could come under pressure due to the remaining impact of wage hikes, ramp-up of lower-margin deals and continued investments in AI platforms. It also pointed to incremental costs linked to scaling new capabilities and integrating acquisitions, which could weigh on profitability in the near term.
Analysts across firms indicated that while margins have held up so far, the combination of weak revenue growth, delayed execution and incremental investments could weigh on near-term performance. The commentary points to limited visibility on organic growth recovery, with deal conversion timelines and execution of large contracts emerging as key monitorables over the next few quarters.
On Friday, Wipro shares closed down 2.78% at Rs 204.35 on BSE.