Wipro reported 3Q IT Services revenue of $2.6 billion, up 1.4% QoQ in constant currency terms but guided for 0-2% QoQ revenue growth in CC for Q4, including a 150 bps contribution from the Harman acquisition.
“We tweak our FY26-28 EPS estimates and expect Wipro to deliver ~2% EPS CAGR over FY26-28E. Limited earnings growth requires higher dividend yields (7-8%+) to make Wipro’s stock an attractive investment. With dividend yield at 3%, the stock should de-rate, in
our view. We maintain our UPF rating with a rolled-over PT of Rs220/share based on 17x PE,” Jefferies said in a note.The Q4 guidance, which was below expectations, factoring in fewer working days, two months of incremental contribution from Harman DTS, and delays in ramp-up of a few large deals, spoiled Dalal Street’s mood.
“Management highlighted that some large deals are experiencing delayed ramp-ups due to which its 4QFY26 growth guidance has been set as 0-2%. This implies an organic growth guidance of -1.6% to 0.4%, which is weak and the key negative surprise from 3Q. We cut our revenue estimates for FY26-28E by 1.5% and expect 2.6% cc revenue CAGR over FY26-28E,” said Akshat Agarwal of Jefferies.
Nomura, however, highlighted high dividend of 4% on Friday’s closing price and said the yield will support stock. It has reduced target price from Rs 300 to Rs 290 to retain buy call but lowered FY26-28 EPS estimates by 2-3%.
Ex-Harman, analysts believe Wipro’s organic growth is likely to be around -0.5% in Q4, as ramp-ups of two large deals have been pushed out and discretionary spends remain cautious.
“We think near-term revenue visibility will remain limited, as fewer working days in 4Q and delayed ramp-ups together weigh on growth. Given this, we now build in an organic revenue decline of 0.4% and overall revenue growth of 0.5% YoY CC in FY26,” Motilal Oswal said while giving a neutral call on Wipro with a target price of Rs 275.
Deal total contract value (TCV) came in at $3.3 billion in Q3 (-5.7% YoY cc), translating into a book-to-bill of 1.27x. Large-deal TCV ($30mn+ deals) declined 8.4% cc YoY to $871mn.
The IT firm’s TCV witnessed a moderation from the peak achieved a couple of quarters ago. The company said some large deals won in the previous quarters are not ramping up, as per guidance, and there would be a possible delay.
“This is likely to impact revenue in the up coming quarters, in our view. Management says the margin profile for Harman DTS acquisition is lower than the company’s; consequently, margin may not sustain at the current level and is likely to see moderation here after,” Elara analysts said.
The domestic brokerage firm also has a sell call with a target price of Rs 220 given lack of growth compared to peers and downward pressure on margin.