Wipro (WPRO IN) – Q1FY27 Result Update – Growth remains elusive, Margins under pressure – Downgrade to ‘REDUCE’
Published on 17 Jul 2026
The management reiterated that AI is expanding the addressable market, it also acknowledged that clients are increasingly reallocating discretionary budgets from traditional IT toward AI, governance & compliance initiatives, resulting in slower conversion of legacy spending in the near term. Despite steady deal momentum (USD 3.4 bn bookings including USD 1.6 bn large deal TCV), Q2 revenue guidance of -1.5% to +0.5% QoQ CC was discouraging. Consequently, we lower our IT Services rev. est. to flat CC in FY27E (1.5% CC earlier) and 1.6% CC growth in FY28E (2.5% CC earlier). We also reduce our IT Services EBIT margin est. to 16.7%/17.0% for FY27E/FY28E (from 17.0%/17.1%) following the Q1 margin miss. We believe slower revenue conversion and continued investments in AI capabilities would continue to weigh on margins, making it difficult for the company to achieve the aspirational band (17.0–17.5%). Our revised estimate translates to an EPS downgrade of ~3.5% for both FY27E and FY28E. We assign a PE of 12x to FY28E EPS to arrive a TP of INR 165 (earlier INR 170) and downgrade to REDUCE (HOLD earlier).
