The market’s harsh reaction was driven by a mix of bottom-line misses and a “key negative surprise” in organic growth guidance. Here are the three primary reasons for the 10% slide:
1. The “Labour Code” & Restructuring Hit
Wipro reported a 7% year-on-year (YoY) decline in consolidated net profit, which fell to ₹3,119 crore.
- Regulatory Impact: The profit was weighed down by a one-time provisional charge of ₹302.8 crore due to the implementation of new Labour Codes in India (impacting gratuity and employee benefits).
- Internal Cleanup: The company also took a one-off hit of ₹263 crore related to its internal restructuring exercise, which CEO Srini Pallia confirmed is now complete.
2. Weak Q4 Guidance (The “Growth Gap”)
Investors were most disappointed by Wipro’s outlook for the final quarter (Q4 FY26).
- Guidance: Wipro projected constant currency revenue growth of just 0% to 2.0%.
- Organic Concerns: Analysts noted that after excluding the recent $375 million Harman DTS acquisition, the organic growth guidance is essentially flat or even negative (-1.6% to 0.4%), suggesting that the core business is still struggling to gain momentum.
3. Brokerage Downgrades
The mixed results led to a divergence in analyst sentiment, but heavyweights leaned toward caution:
- Jefferies: Downgraded the stock to ‘Underperform’ with a target of ₹220, citing “softer deal bookings” (down 9% YoY) and delays in project ramp-ups.
- Morgan Stanley: Cut its target price to ₹242 and downgraded the stock to ‘Equal-weight’.
- The “Value Trap” Debate: While Nomura and JM Financial maintained ‘Buy’ ratings based on cheap valuations and a ~4% dividend yield, others warned the stock might remain a “value trap” until organic revenue acceleration is visible.
Q3 FY26 Performance Snapshot
| Metric | Reported Value | Change (YoY) |
| Gross Revenue | ₹23,556 Crore | +5.5% |
| Net Profit (PAT) | ₹3,119 Crore | -7.0% |
| IT Services Margin | 17.6% | +10 bps (A silver lining) |
| Interim Dividend | ₹6 per share | – |
| Voluntary Attrition | 14.2% | Stabilizing |
Conclusion: A Lacklustre Recovery
Despite a record-high operating margin of 17.6% (the best in years), the market focused on Wipro’s lack of “discretionary spending” from clients. As the company focuses on its “Wipro Intelligence” AI suite to win future deals, the short-term outlook remains muted. For investors, the ₹6 per share dividend (Record Date: Jan 27) offers some consolation, but the stock is expected to remain an underperformer relative to the Nifty IT index in the near term.
