Wipro Q4 Results Review — Weak Guidance Amid Economic Uncertainty; HDFC Securities Retains 'Reduce', Cuts TP

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HDFC Securities Institutional Equities

Wipro Ltd. posted a revenue decline of 0.8% QoQ constant currency, which was towards the lower end of the guidance, while the IT services margin at 17.5% was better versus expectations. The revenue guidance for Q1 FY26E was disappointing at -3.5 to -1.5% QoQ CC.

Despite a strong increase in order booking and large deal wins, Wipro highlighted that clients have become more cautious due to global economic uncertainty and recent tariff announcements. This is leading to potential delays in decision-making and pauses in projects, particularly in the consumer and manufacturing verticals.

As a result, Wipro has issued a cautious guidance, reflecting the current demand environment and expecting a measured approach from clients towards transformation programs and discretionary spending.

Key positives include-

1. strong order bookings and sturdy pipeline,

2. margin discipline,

3. growth in Capco and resilient US BFSI, and

4. strong cash generation with free cash flow/PAT at 130% for FY25.

We believe that leakages in renewals still need to be plugged for Wipro to catch up with peers on growth. We cut our revenue estimates by ~4-5% and the company is expected to register revenue degrowth for the third consecutive year.

Maintain Reduce on Wipro, with a revised target price of Rs 240, based on 18 times FY27E.

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