Wipro faces flat FY27 growth as AI productivity and margin pressure persist
Wipro Ltd.
Neutral
₹178
₹161.7
₹160
10.11%
Investment View and Valuation
Motilal Oswal Financial Services retained its Neutral rating on Wipro in its July 16, 2026 results update and maintained a target price of Rs 160, compared with the then-current market price of Rs 178. The broker believes Wipro’s growth recovery remains elusive, with FY27 likely to deliver flat to slightly negative growth and lag peers.
The view reflects constrained demand caused by longer client decision-making and slower project execution, along with AI-led productivity limiting growth in Wipro’s existing business. The 2QFY27 constant-currency revenue guidance of minus 1.5 per cent to plus 0.5 per cent, equivalent to a USD revenue range of USD 2.574 billion to USD 2.627 billion, points to another soft quarter.
Motilal Oswal values Wipro at 11 times FY28E EPS to derive the Rs 160 target price. The broker also cut FY27E EPS by about 3.5 per cent, reflecting weaker-than-expected 1QFY27 margin and weaker first-half organic growth.
1QFY27 Financial Performance
Wipro reported 1QFY27 IT Services revenue of USD 2.6 billion, down 1.2 per cent quarter-on-quarter in constant currency, broadly in line with Motilal Oswal’s estimate of a 1.3 per cent decline. In rupee terms, revenue, adjusted EBIT and adjusted PAT rose 10.6 per cent, 9.7 per cent and 0.6 per cent year-on-year, respectively.
| Metric | 1QFY27 reported | Broker estimate / comparison |
|---|---|---|
| IT Services revenue | USD 2.6 billion; down 1.2% QoQ in constant currency | Estimate: down 1.3% QoQ |
| Revenue in rupee terms | Up 10.6% YoY | — |
| Adjusted EBIT | Up 9.7% YoY | Margin of 16.0% versus estimate of 16.1% |
| Adjusted PAT | Rs 34 billion; up 0.6% YoY | In line with estimate |
| Order intake | USD 3.4 billion; down 2.4% QoQ in constant currency | — |
| Large-deal TCV | USD 1.6 billion; up 12.9% across 13 large deals | — |
| Net utilisation, excluding trainees | 83.6%; up 10 basis points QoQ | — |
| Trailing-12-month attrition | 13.9%; up 10 basis points QoQ | — |
The board approved an interim dividend of Rs 2 per share.
Business and Geographic Performance
Performance across business areas was uneven. Technology and Communications and Consumer grew 0.2 per cent and 0.7 per cent quarter-on-quarter in constant currency, respectively, while BFSI, Healthcare and Energy declined 1.2 per cent, 2.6 per cent and 3.6 per cent.
| Business area | QoQ constant-currency growth |
|---|---|
| Technology and Communications | 0.2% growth |
| Consumer | 0.7% growth |
| BFSI | 1.2% decline |
| Healthcare | 2.6% decline |
| Energy | 3.6% decline |
APMEA grew 4.4 per cent, while Americas 1, Americas 2 and Europe fell 2.3 per cent, 2.5 per cent and 0.9 per cent, respectively. Management expects BFSI to improve as recent deal wins ramp up, although US healthcare spending pressures and soft EMR demand remain headwinds.
Headcount growth was entirely attributable to the Mindsprint acquisition. Excluding acquired staff, organic headcount declined by about 2,500 quarter-on-quarter.
સ્થાપિત વ્યવસાયો દ્વારા સંપત્તિનું નિર્માણ
લાર્જ-કેપ કંપનીઓ ઘણીવાર મજબૂત અને સ્થિર પોર્ટફોલિયોના પાયારૂપ બને છે. DSIJનું Large Rhino લાંબા ગાળાના રોકાણકારો માટે વિગતવાર સંશોધન દ્વારા પસંદ કરાયેલા મૂળભૂત રીતે મજબૂત વ્યવસાયો પર ધ્યાન કેન્દ્રિત કરે છે.
Demand, Pipeline and AI Strategy
Management described the pipeline as healthy despite selective client spending. It said some large-deal decisions had slipped into 2QFY27, but there had been no deal losses related to vendor consolidation.
Management views reimagined AI as a growth vector, including AI advisory, data priming, agent orchestration, model operations and sovereign AI. Wipro also launched an Applied AI Centre of Excellence for Claude models with Anthropic and is executing the integration of Mindsprint.
However, Motilal Oswal believes AI productivity benefits are increasingly being shared with clients at contract renewals, creating pressure on revenue from legacy services.
Margin Outlook
Margin remains a central concern. The 1QFY27 EBIT margin of 16.0 per cent was affected by wage hikes, large-deal ramp-ups, acquisition integration and AI investments.
Management reiterated its 17.0-17.5 per cent margin aspiration but did not provide a recovery timeline. Motilal Oswal expects residual wage-hike effects, continued AI investment and lower-margin deal ramp-ups to make the recovery gradual.
| Metric | Forecast / outlook |
|---|---|
| FY27E EBIT margin | 16.4% |
| FY28E EBIT margin | 17.0% |
| Management margin aspiration | 17.0-17.5% |
2QFY27 Guidance and Growth Outlook
Wipro’s 2QFY27 constant-currency revenue guidance of minus 1.5 per cent to plus 0.5 per cent indicates that near-term growth is likely to remain soft. Motilal Oswal expects FY27 to deliver flat to slightly negative growth, with Wipro continuing to lag its peers.
The broker’s outlook reflects longer client decision-making, slower project execution, selective spending and the impact of AI-led productivity on Wipro’s existing business. Delayed large-deal decisions and the gradual ramp-up of new deals could also constrain growth.
Key Risks
- Prolonged weak demand and delayed client decision-making.
- Delayed deal closures and slower project or large-deal ramp-ups.
- AI-related pricing pressure and the sharing of productivity benefits with clients at contract renewals.
- Persistent weakness in healthcare spending and EMR demand.
- Slower-than-expected margin recovery due to wage-hike effects, AI investments, acquisition integration and lower-margin deal ramp-ups.
અસ્વીકરણ: આ ઉપર ઓળખવામાં આવેલા બ્રોકર/રિસર્ચ હાઉસ દ્વારા પ્રકાશિત સંશોધન રિપોર્ટનો સારાંશ છે. મંતવ્યો, ભલામણો, લક્ષ્ય કિંમતો અને અંદાજો સંબંધિત બ્રોકરના છે અને DSIJની રોકાણ સલાહનું પ્રતિનિધિત્વ કરતા નથી. સારાંશમાં AIની સહાય લેવામાં આવી હોઈ શકે છે, તેથી સંપૂર્ણ વિગતો, ખુલાસાઓ અને જોખમો માટે મૂળ રિપોર્ટનો સંદર્ભ લો.
