Brokerages downgrade Wipro shares amid weak guidance, tariff-related caution; stock cracks 6%

Nuvama Institutional Equities downgraded shares of Wipro to hold, from buy earlier.

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India's fourth-largest IT services firm Wipro Ltd.'s shares sank over six percent on April 17, after the information technology player reported its earnings for the quarter ended March. Brokerages downgraded their ratings on the tech player as the growth prospects looked uncertain amid a muted demand environment.

At 9.17 am, shares of Wipro were quoting Rs 233, lower by 5.9 percent on the NSE.

For the fourth quarter of the previous financial year, Wipro reported a 6.4 percent sequential rise in net profit to Rs 3,569.6 crore, while gross revenue rose marginally to Rs 22,504.2 crore. Wipro's revenue stood at $2.60 billion, marking a 1.2 percent decline QoQ and a 2.3 percent drop YoY.

Further, the investor sentiment is likely to be negative as Wipro guided for a fall in revenue for the current quarter, with IT services revenue in the range of $2,505 million to $2,557 million, implying a sequential decline of 1.5 to 3.5 percent in constant currency terms.

The company notes that the tariff-induced macro uncertainty is weighing on the demand in verticals like consumer and manufacturing, and has resulted in a pause of certain large transformation projects and impacted discretionary demand from clients.

However, the management attributed the weak guidance to client delaying spending amid increased macro uncertainty. It expects to catch up on growth in H2FY26, as some of large deals will ramp up in H2.

Domestic brokerage Nuvama Institutional Equities downgraded shares of Wipro to hold. "Wipro’s weak Q1FY26 guidance, driven by elevated levels of macro uncertainty due to tariffs, makes it difficult for it to report positive growth in FY26 – thus derailing its turnaround thesis."

With the rapid deterioration of macro, leading to uncertainty around discretionary spends and Wipro's valuation becoming similar to peers, Nuvama said, "With high likelihood of Wipro reporting YoY decline in top line again in FY26, we downgrade the stock to ‘hold’ (from ‘buy’), with inexpensive valuations limiting the downside potential." The brokerage cut its target price on Wipro shares to Rs 260 apiece, down from Rs 300 earlier.

Choice Broking, a domestic financial services firm, noted that the cautious global sentiment, reflected in Q1FY26 guidance, may pose headwinds to the company's positive growth prospects in FY26.

"The company's success hinges on leveraging its Al and consulting strengths and improving performance in key markets," added the brokerage. Consequently, Choice Broking downgraded its rating on Wipro to 'reduce' and lowered the target price to Rs 252.

Japan-based Nomura Holdings also trimmed its target price on Wipro shares to Rs 280, down from Rs 300 earlier to factor in macro risks. However, it maintained its buy call on Wipro shares.

International brokerage Bernstein kept its 'underperform' rating intact, with a target price of Rs 200 per share, indicating a 20 percent downside as Wipro's Q4 performance fell short of expectations.

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