Wipro shares fall over 2% after Q1 results and weak outlook disappoint Street
AI Summary
Wipro shares fell 2.3% following disappointing June quarter results, with brokerages expressing concerns over weak guidance and a delayed recovery outlook. Revenue increased by 10.6% year-on-year, but net profit saw only a slight rise of 0.6%, leading analysts to downgrade target prices and expectations for future growth. Overall, the sentiment around Wipro remains negative as it continues to struggle with organic revenue growth and faces challenges across key business segments.
Wipro shares declined 2.3 per cent on Friday after the IT services company reported its June quarter results and brokerages flagged concerns over weak guidance and a delayed recovery outlook.
At 9.37 am, the stock was trading at ₹175.60 after falling to an intraday low of ₹173.55, compared with the previous close of ₹177.74.
Wipro reported revenue of ₹24,479 crore for the quarter, up 10.6 per cent y-o-y. Net profit stood at ₹3,352 crore, up 0.6 per cent y-o-y.
Jefferies maintained its underperform rating on the stock and cut its target price to ₹150 from ₹180. The brokerage said another soft quarter and September 2026 quarter guidance implied a delayed recovery.
It added that Wipro has struggled to deliver organic revenue growth over the past three years and that FY27 is unlikely to be different.
Jefferies also reduced its FY27-FY29 revenue and profit after tax estimates by 2-5 per cent on a weaker growth outlook and expects a 5 per cent EPS CAGR over FY27-FY29.
Citi maintained its sell rating and lowered its target price to ₹150 from ₹160. The brokerage described the first-quarter performance as disappointing and said Wipro continues to underperform peers, with weakness across major geographies and business verticals.
BofA retained its underperform rating and cut its target price to ₹184 from ₹210. The brokerage said the turnaround is likely to take longer than expected, adding that while the first quarter was in line, the second-quarter guidance was below expectations.
It also noted that margins missed estimates as the company continued to prioritise investments.
Motilal Oswal said it continues to model another weak year for Wipro with flat to slightly negative FY27 constant currency revenue growth, reflecting a soft first half, slower deal ramp-ups and an uneven recovery across verticals.
The brokerage expects margin recovery to remain gradual due to continued AI investments, the remaining wage hike impact in the second quarter and deal ramp-ups offsetting operational improvements.
It cut its FY27 EPS estimate by around 3.5 per cent and reiterated its neutral rating with a target price of ₹160.
Elara Capital maintained its sell rating and lowered its target price to ₹160 from ₹180. The brokerage said weak second-quarter guidance of -1.5 per cent to +0.5 per cent in constant currency terms suggests a weaker-than-expected first half and FY27.
It expects weak performance in BFSI, consumer and energy segments to continue through FY27 and now forecasts a 1 per cent decline in US dollar revenue for both FY27 and FY28. Elara Capital also cut its FY28 earnings estimate by 3 per cent, citing weak revenues and rising costs.
Original Article
Published on Hindu BusinessLine