Wipro Ltd, Indian IT service company, has delivered better than analyst estimates for the December quarter, especially on the back of higher growth in it services revenue as well as Ebitda. It has to be noted that, during the specific quarter, Wipro’s operating margin rose to a three-year high and the company’s revenue guidance has been met for the second straight quarter. However, doubts can be made about sustainability of this growth due to relative weaknesses in certain segments of the businesses and certain geographic areas.
Wipro’s Q3 Growth Overview
Consolidated net profit for the reported quarter was up by 24.48% YoY at ₹3,353.8 crore against ₹2,694.2 crore for the December quarter of the previous fiscal. The revenue from operations was up by 0.51% for the quarter from ₹22,205.1 crore to ₹22,318.8 crore. A consequent increase in IT services operating margin was recorded at 17.5%, which was a record high of the last three years.
Some factors that will support Wipro’s future growth are: H1 FY17 revenue growth was driven by the good performance of its business in the US, with a focus on BFSI & Healthcare which has been supplemented by the return of discretionary revenue. Additionally, the company’s strategic efforts to grow its consulting business and client mining has developed better pipeline at the same time, especially in the America.
Deal Momentum and Vertical Problems
Wipro, for instance, reported that it secured 17 big customers during the quarter indicated an improving deal. Analysts were also left smiling by signs of substantial top account growth, which rose by 8.5% on the sequentially basis. However the problem is not fully solved in other aspects. The weakness was observed in the Energy, Manufacturing, and Technology sector, however, there were early positive signals.
Some concern also arises from regional performance, especially in Europe and APMEA, where conversion of the deal pipeline was less impressive. Two of these risk factors for analysts include Its overdependence on one client and its dependence on US growth.
Wipro Q3 Results Analysts’ Perception
Nirmal Some institutional equities
Nirmal Bang elaborated on Wipro’s somewhat good show in a relatively weak quarter across the Information Technology sectors. However, the brokerage softened the outlook stating that its future growth relies on additional top client addition, European business conversion rates are anemic, and leadership issues in APMEA remain unaddressed.
Herein, based on considerations of these factors, Nirmal Bang raised EBIT estimations for FY26/27 by 40–50 basis points and EPS estimations by 1.1%. But expected revenue was only reduced to the same period by 4.3% because of headwinds. The firm retained its ‘Hold’ recommendation on Wipro with a price for the target of ₹306 based on a valuation multiple of 21.3 times its expected per share of December 2026 earnings of ₹14.4.
MOFSL (Motilal Oswal Financial Services)
MOFSL pointed to increased business in the BFSI and Healthcare LCPs due to discretionary demand, spending. The brokerage added that the refined scale of Wipro’s consulting business and emphasis on minder client has increased its proposed pipeline. However, threats are there in Europe, and APMEA manufacturing and energy verticals.
While MOFSL retained a ‘Neutral’ on Wipro stock with a target price of ₹290, the firm decided to cut its estimates following the Q4 muted guidance due to regional weak environment.
Nuvama Institutional Equities
Nuvama was bullish on Wipro’s results and this commuting with its recent upgrade thesis. The brokerage also highlighted more industry specific favorable aspects such as better portfolio mix and better profit margin. Due to better margins Nuvama increased earnings estimates for FY25 and FY26 by 2-5%. Wipro too was blessed with a ‘Buy’ from financial to financial, while the twelve-month forward target price remained at ₹350.
RESOURCES: Current challenges and future perspective.
There have been better performances by Wipro especially in the Q3 of the FY25; nevertheless, the analysts have the word of advice regarding Wipro’s growth in the future. The guidance for the fourth quarter (-1% to 1% constant currency growth) is lowing due to the problems in some subsegments and geographies, especially in Europe and APMEA.
In particular, the Manufacturing and Energy sectors have client-unique headwinds, which give no signals of improvement in the nearest future. Therefore, these challenges trigger the need to make strategic changes to fuel sustain growth momentum.
Conclusion
So, after consolidating for the December quarter, Wipro has laid down to present to its stakeholders the performance it has put up in continuing to offer strong margins, even in what can be considered a tough marketlocalexternal content. As deal momentum strengthens and as the company looks to grow its consulting segment, the IT major is to benefit from the growth in key markets. However, to achieve sustainable growth it is necessary to identify vertical-specific issues and enhance the performance in regions.
With the analysts’ opinions contrasting regarding the appropriate valuation of the stock in addition to its growth prospects, the future of Wipro will reduce to how well the company is poised to cope up with the changing business environment.
