Wipro share price falls over 2% after Q1 results. Should you buy, sell or hold the IT stock?
AI Summary
Wipro's share price dropped over 2% following a disappointing Q1 FY27 report, where net profit fell 4.2% sequentially, and EBIT margins contracted due to wage hikes and AI investments. Analysts have lowered earnings estimates and price targets, with expectations of flat to slightly negative revenue growth in FY27 amid a challenging macro environment. Despite a robust pipeline, prolonged decision cycles and pricing pressures are likely to hinder near-term growth and margin recovery.
Wipro share price declined over 2% in early trade on Friday after the IT major reported its Q1 results. Wipro shares fell as much as 2.67% to ₹173.05 apiece on the BSE.
India’s fourth largest IT services company, Wipro, posted a consolidated net profit of ₹3,352 crore in the first quarter of FY27, registering a sequential fall of 4.2%.
The company’s IT services revenue in Q1FY27 grew 1.8% quarter-on-quarter (QoQ) to ₹24,453 crore. In Constant Currency (CC) terms, IT services revenue fell 1.2 QoQ.
At the operating level, Wipro’s IT services EBIT fell 5.7% to ₹3,919 crore, while EBIT margin contracted by 130 bps QoQ to 16%, impacted by wage hikes, large-deal ramp-ups, acquisition integration, and continued AI investments.
For the second quarter ending September 2026, Wipro expects IT services revenue in the range of $2.574 billion to $2.627 billion, implying constant currency growth of -1.5% to +0.5% sequentially.
Wipro board also announced an interim dividend of ₹2 per share.
Dipeshkumar Mehta, Senior Research Analyst at Emkay Global Financial Services Ltd. noted that Wipro logged a weak revenue performance in Q1, on delayed ramp-ups of previously won large deals, continued weakness in select BFSI and Healthcare accounts, and elongated client decision cycles amid a challenging macro environment.
Emkay Global tweaked its FY27E EPS estimates by 0.6% and largely retained FY28 and FY29 EPS estimates, after factoring in the Q1 performance.
The brokerage firm retained a ‘Reduce’ call and cut Wipro share price target by 15% to ₹170 from ₹200 earlier.
Motilal Oswal Financial Services continues to model another weak year for Wipro, with flat to slightly negative FY27 CC revenue growth, reflecting a soft H1, slower deal ramp-ups, and an uneven recovery across verticals. It also expects margin recovery to remain gradual, as continued AI investments, the remaining wage hike impact in Q1, and deal ramp-ups offset operational improvements.
The brokerage firm reduced its FY27E EPS estimate by ~3.5%, primarily to factor in the weaker-than-expected Q1 margin performance and weaker H1 organic growth.
It values Wipro shares at 11x FY28E EPS and reiterated ‘Neutral’ rating on the stock with a target price of ₹160.
According to Choice Institutional Equities, Wipro Q1 results were broadly in line, with AI investments, wage revisions and deal ramp-up cost weighing on margin amid a challenging demand backdrop.
“While AI continues to expand the long-term opportunity, it is accelerating the shift in enterprise spending towards AI, data and cloud, while compressing demand for traditional IT and BPO services. Healthy deal wins and a robust pipeline support medium-term revenue visibility; however, prolonged decision cycles, pricing pressure and continued AI investments are likely to keep near-term growth and margin recovery gradual,” said the brokerage firm.
Choice Institutional Equities trimmed its FY27 and FY28 earnings estimate, reflecting a slower growth recovery and a more gradual margin improvement trajectory. At the current valuation, it believes the risk-reward remains unfavourable and assigns ‘Reduce' rating and cut Wipro share price target to ₹170 from ₹185 earlier.
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