Wipro shares see best day in over 2 months post Q1 results; time to buy?

Business Standard

6 days ago

Shares of Wipro Ltd. rose over 4 per cent on Friday after the technology major's first-quarter earnings met the street expectations. However, analysts remained mixed on the margin outlook while growth visibility is seen improving.
The technology bellwether's stock rose as much as 4.34 per cent during the day to ₹271.9 per share, the biggest intraday gain since May 12 this year. The stock pared gains to trade 2.6 per cent higher at ₹267.5 apiece, compared to a 0.25 per cent decline in Nifty 50 as of 9:53 AM.
Wipro Q1 results
The fourth-largest tech services firm reported a 6.7 per cent sequential decline in its net profit to ₹3,330 crore for the first quarter of the current financial year (Q1FY26). Year-on-year (Y-o-Y), profit was up 10.9 per cent. Revenue for Q1 stood at ₹22,134.6 crore, down 1.6 per cent on a quarter-on-quarter (Q-o-Q) basis. The top line was marginally up by 0.77 per cent Y-o-Y.
The company's Q1 performance marginally beat Bloomberg estimates. Revenue was expected at ₹22,078.3 crore and net profit at ₹3,249.4 crore.
The company had healthy deal bookings, which stood at about $5 billion for the quarter ended June 30. Large deal bookings were up 131 per cent to $2.66 billion. That led the IT services player to improve its guidance for the second quarter (July-September). Wipro now expects to degrow by 1 per cent at worst, or grow by 1 per cent at best, in constant currency terms.
Wipro Management commentary
The drop in revenue to a muted quarter was attributed to continuing macroeconomic uncertainty. 'We remain cautious in this environment, and the uncertainty continues,' Wipro Chief Executive Officer Srini Pallia said on Thursday.
'While discretionary budgets are tight, we see strong deal momentum in America, especially in banking, financial services and insurance (BFSI), where demand is strong and steady. Healthcare is also doing well,' he added.
Analysts on Wipro Q1 results
Nomura said that Wipro delivered a strong performance in the first quarter of FY26, surpassing expectations across most key metrics. A sharp pickup in deal wins was a notable highlight.
However, Nomura cautions that the near-term outlook could face margin headwinds. Wipro's management acknowledged that recent deal wins would require upfront investments, which may temporarily weigh on profitability. Given the expected impact from the recent projects, Nomura has revised its FY26 Ebit margin forecast downward by 80 basis points to 16.2 per cent.
Motilal Oswal expects Wipro's FY26 constant currency (CC) revenue to decline by 1.3 per cent Y-o-Y, citing a weak start to the year. The company's IT services Q2 revenue guidance remains muted, it noted. A gradual recovery is anticipated in the second half, as large deal ramp-ups begin to reflect in revenue.
The brokerage believes there is limited scope for margin expansion from current levels. The firm maintained its 'Sell' rating, with a target price of ₹230.
Nuvama Institutional Equities noted that Wipro delivered a better-than-expected Q1 performance, though it noted that expectations were already muted. The brokerage sees strong deal wins as a positive signal that could drive growth in the upcoming quarters. However, it remains cautious, awaiting clearer signs of macroeconomic improvement and consistency in execution before turning bullish.
Margins are expected to remain under pressure, Nuvama said. The firm maintains a 'Hold' rating on the stock, with a revised target price of ₹270 (up from ₹260).
Wipro share price history
Shares of the company have recovered by 14 per cent from their April lows and currently trade at 10 times the average 30-day trading volume, according to Bloomberg. The counter has fallen 12 per cent this year, compared to a 5.8 per cent advance in the benchmark Nifty 50. Wipro has a total market capitalisation of ₹2.79 trillion.