Wipro (WPRO IN) – Q4FY26 Result Update – Weak start to another challenging year – Downgrade to ‘HOLD’

Wipro reported Q4 revenue growth of +0.2% QoQ CC, below our and consensus estimates of +0.8% QoQ CC. Harman DTS integration contributed ~1.5% QoQ in Q4 (our estimates). The weakness was driven by multiple headwinds in the organic business in America region, including slower deal ramp-ups & client-specific issues in BFSI, and a sharp decline in the Healthcare segment due to seasonality and policy changes. FY26 deal wins at USD 16.4b were strong YoY compared to FY25, with a healthy mix of vendor consolidation, strategic engagements, and multiple mega deals. However, continued client-specific challenges (expected to persist through Q1) and slower deal conversion are likely to weigh on near-term organic growth. Weak Q1 revenue guidance of -2% to 0% QoQ CC includes ~1.5 months contribution from Olam Group and Alpha Net acquisition. Considering the slower TCV-to-revenue conversion and softness in Q1, we anticipate FY27E to be another challenging year. Hence, we revise our revenue growth estimates downward to 1.5% and 2.5% YoY CC for FY27E and FY28E, respectively (from 3.6% and 4.2% earlier). On margins, Q1 will face headwinds from wage hikes (two-month incremental impact), acquisition integration costs, and large deal ramp-ups. However, we largely maintain our EBIT margin estimates due to solid cost control and currency support. We assign a PE of 14x (earlier 15x) to FY28E EPS to arrive a TP of INR 200 (earlier INR 230) and downgrade to HOLD (BUY earlier).