Wipro Shares Slide After Weak Q2 Outlook Deepens IT Slowdown Concerns; Brokerages Cut Target Prices

Mumbai, July 17: Wipro share price fell as much as 2% on Friday after the IT services major issued a weaker-than-expected revenue outlook for the September quarter, reinforcing concerns that India’s $315-billion information technology services industry continues to grapple with sluggish client spending, delayed decision-making and an uncertain demand environment. 

The company forecast sequential revenue to range between a 1.5% decline and 0.5% growth in constant currency for the second quarter, falling short of analysts’ expectations. The disappointing guidance prompted a fresh round of brokerage downgrades. As of writing the stock was down 1.6% at Rs 175. 

Muted guidance weighs on sentiment 

Investors focused on management’s cautious outlook, which signalled that the recovery in discretionary technology spending remains elusive. 

The company expects revenue from its IT services business to remain largely flat in the September quarter, highlighting continued uncertainty in its key markets. Analysts said the guidance reflects persistent weakness in client spending, particularly in North America, where enterprises remain cautious about launching large transformation projects. 

The subdued outlook contrasts with hopes that spending would gradually recover during the second half of the financial year as macroeconomic conditions stabilise. Instead, Wipro’s forecast suggests clients continue to prioritise cost optimisation over new technology investments.  

Revenue misses expectations 

For the June quarter, Wipro posted revenue of ₹24,479 crore, up 10.6% year-on-year but below analysts’ expectations. 

Net profit rose just 0.6% to ₹3,352 crore, also missing market estimates. 

Operating margins declined to 16% from 17.3% a year earlier as annual salary hikes and investments in executing large contracts increased costs. Management indicated that margins may remain volatile in the near term as the company continues investing in strategic capabilities, artificial intelligence and talent development.  

Deal wins fail to reassure investors 

One of the biggest disappointments was a sharp decline in total deal wins. 

Wipro reported total contract wins of $3.37 billion during the quarter, significantly lower than the $5 billion reported a year ago. Analysts noted that while the company continues to secure large contracts, it has struggled to convert those wins into sustained revenue growth. 

Brokerages believe execution remains the key challenge, with slower project ramp-ups and longer client decision cycles delaying revenue recognition. 

This has increasingly differentiated Wipro from peers such as Tata Consultancy Services, HCLTech and Tech Mahindra.  

Peers outperform amid industry slowdown 

India’s IT sector continues to face pressure from weak discretionary spending and growing uncertainty surrounding enterprise technology budgets. 

However, recent earnings from larger peers have painted a relatively more resilient picture. 

TCS exceeded analysts’ expectations earlier this month, while HCLTech and Tech Mahindra also reported stronger-than-expected revenue growth, helped by resilient demand in select verticals and the benefit of a weaker rupee. 

Against this backdrop, Wipro’s weak guidance has reinforced concerns that company-specific execution issues are compounding broader industry headwinds. Analysts said Wipro remains more dependent on legacy contracts and has been slower than peers in translating large deal wins into meaningful revenue acceleration.  

Brokerages slash price targets 

The earnings announcement triggered a wave of downward revisions from analysts. 

At least 14 brokerages cut their target prices following the results, reducing the median target to ₹187 from ₹210 previously, citing weaker growth visibility and concerns over continued execution challenges. 

What investors will watch 

Going forward, investors will closely monitor whether Wipro can improve execution and convert its existing order book into revenue growth. 

The pace of client spending recovery, large deal conversions, margin stability and adoption of AI-led services will remain key indicators for the company. Management has reiterated its focus on strengthening consulting capabilities and expanding AI offerings, but analysts believe meaningful improvement in financial performance will depend on a broader recovery in global technology spending. 

For now, Wipro’s cautious outlook has reinforced fears that the recovery in India’s IT services sector may take longer than markets had anticipated, even as several of its larger peers continue to outperform. 

Source

•  https://www.nseindia.com/get-quote/equity/WIPRO/Wipro-Limited