WIPRO

’s Valuation Gap Persists Amid Subdued Revenue Visibility

shares fell over 8% following its Q3FY26 results, as management commentary flagged subdued revenue growth, deal ramp-up delays, and margin pressure. While Q3 revenue growth came in near the upper end of guidance, the sharp decline in deal bookings and muted Q4 outlook prompted earnings downgrades. With FY26 likely to mark the third consecutive year of revenue decline, investor sentiment remains cautious. Revenue and Deal Flow Trends - Q3FY26 constant currency revenue grew 1.4% QoQ, aided by 80 bps from DTS Harman acquisition. - Total contract value (TCV) fell 29% QoQ and 6% YoY to $3.34 billion. - Large deal bookings dropped 69.5% YoY and 9.4% QoQ to $871 million. - Management flagged delays in deal ramp-ups, impacting near-term visibility. Q4 and FY26 Outlook - Q4FY26 revenue guidance: 0–2% growth, includes Harman contribution. - Organic growth may struggle due to slow deal starts and fewer workdays. - Ambit Capital projects 1.6% revenue decline in FY26, marking third straight year of contraction. Segmental Weakness - BFSI, consumer, energy, natural resources, and utilities—70% of revenue base—expected to remain flat to negative YoY. - Demand uncertainty and historical deal leakages limit rebound potential in FY27. Margin Dynamics - IT Services EBIT margin rose to 17.6%, supported by rupee depreciation, utilisation gains, and cost control. - Harman’s lower margin profile expected to dilute margins in FY27. - PL Capital forecasts margins at 17.4% (FY26), 17.1% (FY27), and 17.5% (FY28) post integration. Valuation and Investor Implications - Wipro trades at 19x FY27 earnings, below peers at ~20x. - Valuation gap may persist unless earnings trajectory improves. - Execution on deal ramp-ups and margin stability will be key to restoring investor confidence.