Shares of Wipro fell as much as 4% to Rs 202 on the NSE on Friday after the IT major reported a decline in fourth-quarter profit and flagged a subdued near-term outlook.The company posted a 2% year-on-year drop in consolidated net profit to Rs 3,502 crore for Q4, even as revenue rose 8% to Rs 24,236 crore. However, growth in its core IT services business remained weak, with revenue at $2.65 billion, up just 0.6% sequentially and 2.1% annually, highlighting muted demand.
Weak guidance, demand concerns weigh
Investor sentiment was further hit after Wipro forecast June-quarter revenue to range from a 2% decline to flat growth sequentially, citing cautious spending by US banking and financial clients, as per Reuters.The weak outlook overshadowed the company’s Rs 15,000 crore share buyback announcement, with the stock also falling nearly 5% in US trading overnight.The stock was among the top losers on the IT index and a major drag on the Nifty 50.Analysts flagged persistent growth challenges. Dolat Capital said the forecast underscores “organic growth challenges,” while Ambit Capital warned revenue weakness may become entrenched, potentially marking a fourth straight year of decline by FY27, as per Reuters.
Margins, deal conversion remain key risks
Margins also remain under pressure, with IT services operating margin at 17.3%, down both sequentially and year-on-year.Brokerages including Emkay Global pointed to wage hikes, low-margin deals and acquisitions as ongoing headwinds.While deal bookings stood at $3.5 billion in Q4, analysts noted that large, long-tenure contracts are taking longer to convert into revenue, weighing on near-term growth.Brokerage views remain mixed. Morgan Stanley and Goldman Sachs retained cautious ratings, citing weak performance and outlook, while Nomura maintained a more optimistic stance, betting on future growth driven by AI-led transformation, as per ET.The stock has fallen over 22% so far this year, making it the worst performer among IT peers amid demand uncertainty and concerns over AI-led disruption.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
