Wipro Q1 Review: Strong Deal Wins, Stabilising Outlook— Buy, Sell Or Hold? Brokerages Mixed

Wipro’s Q1 FY26 results have drawn a cautiously optimistic response from leading brokerages, who noted that while the company’s performance beat low expectations and deal wins were robust, ongoing margin pressures and muted revenue growth continued to limit upside potential.

Analysts from Jefferies, Morgan Stanley, and Macquarie highlighted improving visibility into the second half of the fiscal year, driven by record deal bookings and signs of stabilisation in key geographies.

The Bengaluru-based IT giant, reported its Q1 FY26 earnings on Thursday, posting a 7% sequential decline in net profit to Rs 3,336 crore. Despite the drop, the results aligned with market expectations, coming close to the Rs 3,588-crore consensus estimate tracked by Bloomberg.

EBIT margin for IT services stood at 17.3%, and net profit rose 17% year-on-year to Rs 3,500 crore, aided by higher other income and lower tax provisions.

Jefferies acknowledged the beat on estimates and raised its earnings per share forecast by 2%, but maintained an “Underperform” rating, citing limited earnings growth and valuation concerns.

“Wipro’s 1QFY26 results beat estimates, and healthy deal bookings point to an incrementally better outlook,” Jefferies noted. “We raise our EPS estimates by 2% and expect 6% EPS CAGR over FY26–28E," it added.

The brokerage emphasised that while deal wins were strong, revenue declines in key verticals like BFSI and consumer segments remained a concern.

“BFSI was down 3.8%, largely due to Europe, while consumer, retail demand continues to be affected by tariff uncertainties.”

Jefferies also flagged margin dilution due to ramp-up costs and said, “Margins were down 10bps quarter on quarter to 17.2%. Lower employee costs helped, but were offset by higher subcontracting, travel, and overheads.”

It retained its price target of Rs 235 per share, stating, “Limited earnings growth requires higher dividend yields (over 5%) to make Wipro’s stock attractive. With current yield at 3%, the stock should de-rate.”

Morgan Stanley viewed the quarter positively, noting that Wipro’s performance exceeded subdued expectations and that large deal wins could drive growth in the second half.

“Wipro’s 1Q performance topped Street expectations, and 2Q guidance was in line. Strong large deal wins bode well for growth acceleration in H2,” the firm stated.

The brokerage highlighted that client-specific issues in Europe are stabilising and that Capco’s resilience was a bright spot.

“Capco grew 6% YoY despite weak discretionary spending. The trailing 12-month order book was $1 billion, with momentum continuing.”

However, Morgan Stanley warned of margin pressures, stating “near-term margins could fall below the aspirational level of 17–17.5%. We cut our EBIT margin assumption to 16.8% for FY26.”

It raised its target price to Rs 285 from Rs 265, citing improved capital allocation and medium-term growth potential. “We remain 'Equal Weight' due to the need for sustained revenue improvement and margin challenges that could keep EPS expectations in check," the brokerage noted.

Macquarie was the most bullish among the three, retaining its “Outperform” rating and price target of Rs 290.

“Wipro reported $5 billion in deal wins in 1QFY26, up 51% YoY, including 16 large deals—two of which were mega deals,” Macquarie noted.

It further added that EBIT margin was a beat versus brokerage's estimate, adjusted for the Rs 240 crore restructuring charge.”

Macquarie acknowledged weak performance in BFSI and consumer verticals, but emphasised the outlook, stating that “management guided for -1% to +1% quarter on quartet revenue growth in 2QFY26 and suggested H2FY26 will be better, aided by ramp-up of large deals.”