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Wipro, a major player in the IT services sector, is poised to release its first quarter results for the financial year 2026 on Thursday, July 17th. The anticipation surrounding this announcement is tinged with concern, as analysts widely anticipate a lackluster performance. Several factors are contributing to this pessimistic outlook, including a noticeable dip in discretionary spending across industries, persistent softness in the European market, and a frustratingly slow pace of deal closures. These macroeconomic headwinds, coupled with company-specific challenges, are expected to weigh heavily on Wipro's revenue and profitability for the quarter. Investors and industry observers will be scrutinizing the company's report for insights into how it is navigating these turbulent waters and what strategies it is employing to mitigate the negative impacts. Key metrics to watch include the size and composition of Wipro's deal pipeline, its performance in the crucial European market, and any announcements regarding large-scale deal wins, which could signal a potential turnaround in the coming quarters. The company's guidance for the quarter, previously set at a revenue decline of 1.5 to 3.5 percent in constant currency, has already set a somber tone. Analysts will be keen to see if Wipro manages to stay within this range or if the actual results fall short of expectations. The broader implications of Wipro's performance extend beyond the company itself, potentially influencing investor sentiment towards the entire IT services sector and providing valuable clues about the overall health of the global economy. The report will be dissected for signs of resilience, innovation, and strategic adaptation in the face of challenging market conditions. Furthermore, any commentary from Wipro's leadership team regarding their outlook for the remainder of the financial year will be closely analyzed for clues about the company's future prospects and its ability to weather the ongoing storm.
Kotak Institutional Equities has offered a detailed perspective on the factors influencing Wipro's Q1FY26 performance. Their analysis points to a significant 2.7 percent revenue decline, aligning closely with the midpoint of Wipro's own projected guidance. This anticipated weakness is primarily attributed to subdued demand, particularly in Europe, and company-specific issues that have hampered growth in that region. Despite the expected revenue slump, Kotak remains cautiously optimistic about Wipro's ability to maintain stable EBIT margins. This stability is expected to be achieved through a combination of aggressive cost control measures and favorable currency tailwinds. Kotak also anticipates a strong showing in terms of large deal total contract value (TCV), projecting a figure of around $1.2–1.3 billion. This projection underscores Wipro's strategic focus on securing large, long-term contracts, which could provide a buffer against the prevailing market headwinds. Kotak's assessment highlights the importance of monitoring Wipro's ability to win vendor consolidation deals, its progress on growth recovery initiatives, and the effectiveness of its Global Capability Center (GCC) strategy. These factors will be crucial in determining the company's long-term trajectory and its ability to regain its competitive edge in the IT services market. The brokerage's analysis suggests that while the short-term outlook remains challenging, Wipro's strategic initiatives and cost management efforts could pave the way for a gradual recovery in the coming quarters. The focus on large deals and the leveraging of GCC capabilities are seen as potential growth drivers that could help Wipro navigate the current market uncertainties. The success of these strategies will be critical in determining whether Wipro can achieve its long-term growth objectives and maintain its position as a leading IT services provider.
Anand Rathi provides further granularity on the potential challenges facing Wipro in Q1FY26, emphasizing the company's significant exposure to the Manufacturing and Retail (M&R) segment. This segment, which accounts for approximately 35 percent of Wipro's revenue, is currently under considerable stress due to tariff-related uncertainties and delayed client spending. The ongoing trade tensions and geopolitical risks are creating an environment of caution among manufacturers and retailers, leading to a slowdown in IT investments and project deferrals. As a result, Anand Rathi forecasts a 2.6 percent sequential decline in constant currency revenue, the steepest among Tier-I IT players. This projection highlights the vulnerability of Wipro's revenue stream to the challenges facing the M&R sector. Despite the anticipated revenue decline, Anand Rathi expects Wipro to report positive EBITDA and EBIT growth, with a year-on-year EBITDA margin expansion of 87 basis points. This projection suggests that Wipro is effectively managing its costs and improving operational efficiency, even in the face of revenue pressures. The brokerage also notes that Wipro's valuation, with a FY26E P/E of 21.1x, is slightly below its peers, reflecting muted market expectations. The company's FY26–28 earnings CAGR is estimated at just 6.6 percent, among the lowest in the large-cap IT space. This relatively low growth forecast underscores the challenges Wipro faces in achieving significant revenue growth in the current market environment. Anand Rathi's analysis suggests that while Wipro is taking steps to improve its profitability and efficiency, the company's revenue growth prospects remain limited in the near term due to its exposure to the struggling M&R sector and the overall macroeconomic headwinds.
Axis Securities echoes the concerns surrounding Wipro's Q1FY26 performance, anticipating a 3 percent revenue decline on a sequential basis in rupee terms. This decline is attributed to continued weakness in Europe and slow deal closures, mirroring the challenges highlighted by other analysts. However, Axis Securities expects Wipro's operating margins to improve by 29 basis points, driven by cost control initiatives. This expectation suggests that Wipro is proactively managing its expenses and streamlining its operations to mitigate the impact of revenue decline. Axis Securities has included Wipro on its 'Top Result Negative Plays' list, along with Cyient and KPIT Technologies, reflecting concerns over execution and earnings pressure. This designation indicates that Axis Securities anticipates Wipro's Q1FY26 results to be disappointing and potentially below market expectations. Despite the near-term concerns, Axis Securities remains hopeful about the medium-term outlook, citing potential deal ramp-ups in H2FY26 and a pick-up in AI-led and cost-takeout deals. This optimism suggests that Wipro has the potential to regain its growth momentum in the second half of the financial year, driven by strategic initiatives and emerging market opportunities. The brokerage's analysis highlights the importance of monitoring Wipro's ability to execute its strategic plans and capitalize on the growing demand for AI-powered solutions and cost optimization services. The success of these efforts will be crucial in determining whether Wipro can achieve its medium-term growth objectives and improve its overall financial performance.
Looking back at Wipro's Q4FY25 performance provides some context for the current challenges. In the previous quarter, Wipro reported a net profit of ₹3,570 crore, marking a 25.9 percent year-on-year (YoY) growth and a 6.4 percent rise sequentially. However, revenue from operations during the quarter stood at ₹22,500 crore, reflecting a modest 1.3 percent YoY growth and 0.8 percent sequential increase. This mixed performance indicates that while Wipro was able to improve its profitability, revenue growth remained subdued. The company's IT services segment, which contributes the bulk of its topline, posted revenue of US $2.596 billion, down 2.3 percent YoY and 1.2 percent quarter-on-quarter in reported terms. In constant currency, the IT services revenue declined 0.8 percent sequentially, indicating ongoing pressure on discretionary tech spending by global clients. Notably, operating margins for the quarter expanded 110 basis points YoY to 17.5 percent, supported by productivity improvements and cost rationalisation, even though they remained flat on a quarterly basis. This margin expansion demonstrates Wipro's ability to improve its operational efficiency and profitability, even in a challenging revenue environment. Wipro's large deal wins during Q4 stood at $1.763 billion, up 48.5 percent YoY, indicating healthy traction in long-term strategic contracts. The company also reported total bookings of $3.955 billion, up 13.4 percent sequentially. The management highlighted that clients continue to remain cautious amid macroeconomic uncertainty, which is impacting near-term demand and decision-making cycles, particularly in sectors such as energy, manufacturing, and resources. However, the banking sector showed resilience, contributing positively to the revenue mix. The Q4FY25 results reveal a company that is actively managing its costs, winning large deals, and adapting to the evolving needs of its clients. However, the subdued revenue growth and the pressure on discretionary spending underscore the challenges Wipro faces in the current market environment.
Wipro's Q4FY25 also showcased healthy cash flow and a 15 percent attrition rate. Wipro confirmed the interim dividend of ₹6 per share for FY25. The company also maintained a healthy liquidity position, with operating cash flow at ₹3,750 crore, amounting to over 104 percent of net income. Meanwhile, voluntary attrition on a trailing 12-month basis was reported at 15 percent, showing signs of stabilisation in workforce metrics. This attrition rate indicates that Wipro is effectively retaining its talent and managing its workforce turnover. In its previous quarter result statement Wipro guided for IT services revenue in the range of US $2.505–2.557 billion, which translates to a decline of 1.5 percent to 3.5 percent in constant currency terms. This guidance set a cautious tone for the Q1FY26 performance and aligned with the expectations of analysts who anticipated a challenging quarter. In conclusion, Wipro's Q1FY26 results are expected to reflect the challenges facing the IT services sector, including subdued demand, softness in Europe, and slow deal closures. While the company is taking steps to manage its costs and improve its operational efficiency, its revenue growth prospects remain limited in the near term. The key factors to watch will be Wipro's deal pipeline, its performance in the European market, and any announcements regarding large-scale deal wins. The company's ability to execute its strategic plans and capitalize on emerging market opportunities will be crucial in determining its long-term success. Investors and industry observers will be closely scrutinizing Wipro's Q1FY26 results for insights into the company's resilience, innovation, and strategic adaptation in the face of challenging market conditions.
Source: Wipro Q1FY26: From guidance to growth, 7 key factors to watch