Wipro faces muted growth outlook as deal bookings decline despite AI expansion

Investment View and Recommendation

ICICI Securities' October 16, 2026 results update on Wipro maintains a REDUCE rating. The broker believes Wipro still lacks broad-based and sustained revenue-growth momentum. Its Q3FY27 guidance of minus 1.5 per cent to plus 0.5 per cent quarter-on-quarter in constant currency remains muted, while H1FY27 deal bookings declined 38 per cent year-on-year.

ICICI Securities believes a durable recovery requires growth across verticals and markets, together with healthier total contract value. Neither has consistently materialised in recent quarters.

Q2FY27 Financial Performance

Wipro reported flat quarter-on-quarter constant-currency IT Services revenue in Q2FY27 at USD 2,611.5 million. This was ahead of ICICI Securities' estimate of a 0.5 per cent decline and consensus expectations of a 0.7 per cent decline. Revenue was in the upper half of management's guidance range and grew 0.6 per cent year-on-year in constant currency.

Segment and Market Performance

Consumer revenue grew 2.6 per cent quarter-on-quarter in constant currency, supported by consumer packaged goods, travel and transportation, new wins and the Olam deal. Energy, Manufacturing and Resources grew 1.1 per cent, aided by earlier deal ramp-ups, energy, business process services and engineering.

Banking, Financial Services and Insurance rose 1.0 per cent, supported by a consulting-led transformation win, a delayed mega-deal ramp-up and renewed momentum at a European client. Technology and Communications fell 2.6 per cent sequentially but rose 7.1 per cent year-on-year, while Health declined 3.8 per cent due to US policy changes.

Three of four strategic market units grew sequentially. Americas 1 declined 2.1 per cent because of client-specific issues and healthcare softness.

Management Outlook and Operating Developments

Management expects revenue growth to improve in Q4FY27 as deals that slipped from Q2FY27 to Q3FY27 begin contributing. It attributed the current guidance largely to seasonal furloughs and fewer working days, and expects a healthy bookings recovery in Q3FY27 after Q2FY27 deal slippages.

Net headcount declined by 6,716 sequentially to 236,328 and was flat year-on-year. Management said it did not undertake campus hiring in H1FY27 but expects to visit campuses in H2FY27 as volumes grow. AI-led productivity is also influencing hiring decisions.

AI Capabilities and Recent Wins

Wipro is expanding its AI capabilities through its AI Native unit, launched in April 2026. The unit has more than 2,000 engineers and is gaining traction in outcome-based engagements.

The company cited deployments across US banking, Middle East petrochemicals and US healthcare, alongside industry-specific small language models. Recent wins included an AI Global Capability Center, an AI-native digital operations platform and an AI supply-chain intelligence platform.

Estimates, Valuation and Risks

ICICI Securities marginally reduced its FY27E and FY28E estimates. The broker's revisions were as follows:

Its FY27E to FY29E forecasts imply revenue growth of 7.2 per cent, 3.2 per cent and 4.8 per cent, respectively, with EBITDA margins near 19.4 per cent to 19.5 per cent.

The broker rolled its valuation forward by two quarters to Q3FY28 to Q2FY29E EPS of Rs 14 and retained an 11 times target multiple. This resulted in a target price of Rs 154.

Key Risks

• Upside risks: A faster macro recovery and quicker deal ramp-ups.
• Downside risks: Market-share losses and delayed deal ramp-ups.