Wipro’s Q1 FY26 Performance: Mixed Reactions from Analysts
Wipro’s first-quarter results for fiscal year 2026 have sparked a range of reactions from leading financial analysts. While the company managed to exceed expectations and secured several significant deals, concerns around margin pressures and slow revenue growth continue to cast a shadow over its performance.
The Bengaluru-based IT giant released its quarterly earnings on Thursday, reporting a 7% sequential decline in net profit to Rs 3,336 crore. Despite this drop, the results were in line with market forecasts, closely matching the Rs 3,588-crore consensus estimate tracked by Bloomberg. This outcome reflects a mix of resilience and challenges that the company is navigating in the current economic landscape.
In terms of financial metrics, the EBIT margin for IT services stood at 17.3%, and net profit increased by 17% year-on-year to Rs 3,500 crore. This growth was supported by higher other income and lower tax provisions. However, the company faces ongoing challenges in maintaining profitability amid rising operational costs.
Analyst Perspectives
Jefferies, one of the leading brokerages, acknowledged Wipro’s strong performance, noting that the results beat estimates and that healthy deal bookings indicated an improved outlook. The firm raised its earnings per share (EPS) forecast by 2%, projecting a 6% EPS compound annual growth rate (CAGR) over the next three years. However, it maintained an “Underperform” rating due to limited earnings growth and valuation concerns.
Jefferies pointed out that while deal wins were strong, certain verticals such as BFSI and consumer segments experienced declines. Specifically, the BFSI segment saw a 3.8% drop, largely attributed to issues in Europe. Additionally, the consumer and retail sectors faced challenges due to tariff uncertainties. The brokerage also highlighted margin dilution caused by ramp-up costs, noting that margins fell 10 basis points quarter-on-quarter to 17.2%. Although lower employee costs helped, these gains were offset by higher subcontracting, travel, and overhead expenses.
Morgan Stanley took a more positive stance, stating that Wipro’s performance exceeded subdued expectations and that large deal wins could drive growth in the second half of the fiscal year. The firm noted that client-specific issues in Europe are stabilizing and that Capco’s performance remained resilient, growing 6% year-on-year despite weak discretionary spending.
However, Morgan Stanley also warned about potential margin pressures, suggesting that near-term margins might fall below the aspirational level of 17–17.5%. It adjusted its EBIT margin assumption for FY26 to 16.8%. Despite this, the brokerage raised its target price to Rs 285 from Rs 265, citing improved capital allocation and medium-term growth potential. It retained an “Equal Weight” rating, emphasizing the need for sustained revenue improvement and addressing margin challenges.
Macquarie was the most optimistic among the three, retaining its “Outperform” rating and a price target of Rs 290. The brokerage highlighted Wipro’s impressive $5 billion in deal wins during Q1 FY26, which represented a 51% year-on-year increase. It also noted that the EBIT margin exceeded expectations, even after adjusting for a Rs 240 crore restructuring charge.
While Macquarie acknowledged weak performance in BFSI and consumer verticals, it emphasized the positive outlook, pointing to management’s guidance for -1% to +1% quarter-on-quarter revenue growth in Q2 FY26. The brokerage suggested that the second half of the fiscal year would see better performance, driven by the ramp-up of large deals.
Overall, Wipro’s Q1 FY26 results reflect a complex picture of progress and challenges. While the company has made strides in securing new deals and improving certain financial metrics, ongoing issues with margins and revenue growth remain key areas of concern for analysts.
