Shares of Indian IT services giant Wipro Ltd. experienced a downturn following the company's release of its fourth-quarter results and a cautious outlook for the upcoming June quarter. The company's American Depositary Receipts (ADR) fell by 4.85% overnight as investors reacted to the underwhelming guidance.
Wipro's Soft Q1 Guidance and Market Reaction
For the June quarter, Wipro has projected a sequential constant currency (CC) revenue growth ranging from a decline of 2% to flat. This soft guidance is attributed to several factors, including account-specific challenges in the Americas region, delays in the ramp-up of large deals, a decline in top client spending, and persistent weakness in the US Banking, Financial Services, and Insurance (BFSI) sector. Management also noted that recent large deals and acquisitions are expected to contribute for only half the quarter, implying a potential organic business de-growth in Q1.
Total bookings for the fourth quarter declined by 11% year-over-year in constant currency, with large deal bookings seeing a significant 20% drop. Non-large deal bookings also decreased by 15% year-over-year, reflecting ongoing pressures on discretionary IT spending across the industry.
Share Buyback and Dividend Payouts
Amidst the challenging outlook, Wipro announced a substantial share buyback program worth Rs 15,000 crore, offering to repurchase shares at Rs 250 each. This buyback price represents a 19% premium compared to the current market price, a premium broadly consistent with Wipro's previous buyback initiatives. This is in addition to a dividend payout of Rs 11 per share made over the fiscal year 2026.
Analyst Perspectives on Wipro's Future
Brokerage firms have offered a range of opinions and revised target prices for Wipro following the announcement:
- Jefferies suggested a target price of Rs 180 for the stock. The firm highlighted that the expected organic business de-growth in the first quarter contributed to its cautious stance.
- Motilal Oswal Financial Services Ltd (MOFSL) reiterated a 'Neutral' rating with a target price of Rs 215. MOFSL noted that near-term visibility remains limited due to ramp-up delays and seasonal factors, emphasizing that timely execution of deals will be crucial for improved growth.
- Nuvama Institutional Equities maintained a 'Buy' rating, upgrading its target price to Rs 255 from Rs 240. Nuvama cited Wipro's inexpensive valuation and the sizeable buyback as key attractions. The firm also upgraded its FY27E/28E estimates, factoring in a lower share count due to the buyback and a higher USD-INR assumption.
- Morgan Stanley reportedly maintained an 'Underweight' rating on Wipro, reducing its target price significantly to Rs 192 from an earlier Rs 242, indicating increased caution.
While some analysts see value in Wipro's current valuation and buyback, others remain wary of the immediate growth challenges and the limited visibility into a potential rebound in the coming quarters.