Wipro, one of India's leading IT services companies, faced a significant decline in its stock price following the release of its fourth-quarter financial results for the fiscal year 2024-25. On April 17, 2025, shares of Wipro dropped by over 6% in early trading, hitting an intraday low of ₹232.15 on the National Stock Exchange (NSE). This downturn came despite the company reporting a net profit of ₹3,570 crore, a remarkable 26% increase from ₹2,835 crore in the same quarter the previous year, which surpassed market expectations of ₹3,290 crore.
Wipro's operating revenue for the quarter rose by 1% year-on-year, reaching ₹22,504 crore, compared to ₹22,208 crore during the corresponding period last year. However, revenue from its core IT services segment faced challenges, coming in at $2,596.5 million. This figure represented a decline of 1.2% on a quarterly basis and 2.3% year-on-year. When adjusted for constant currency, the revenue dipped by 0.8% quarter-on-quarter and 1.2% year-on-year.
Despite the solid profit figures, the company's cautious outlook for the upcoming fiscal year 2025-26 has raised concerns among investors and analysts alike. Wipro's management provided guidance indicating that IT services revenue is expected to fall within the range of $2,505 million to $2,557 million, translating to a sequential decline of between -3.5% and -1.5% in constant currency terms. This projection has led to a more cautious sentiment in the market.
"The global industry environment remained uncertain for most of the year, and the recent tariff announcements have only added to that," stated Srini Pallia, CEO and Managing Director of Wipro, during a media briefing. He highlighted the impact of a deteriorating macroeconomic environment and the ongoing tariff war, which have caused clients to be more cautious regarding spending on transformation projects.
Brokerages reacted swiftly to the fourth-quarter results, with many downgrading their ratings and cutting target prices for Wipro's stock. Nuvama downgraded Wipro to 'Hold' and reduced its target price from ₹300 to ₹260, citing the weak performance of the IT services segment. Similarly, Choice Broking also downgraded the stock to 'Reduce,' slashing its target price to ₹252 from ₹278, indicating concerns about margin pressures and a weak revenue environment.
Analysts from ICICI Securities described Wipro's fourth-quarter performance as "abysmal" in terms of revenue, attributing the lackluster results to global macroeconomic uncertainty and the impact of US tariffs. They noted that sectors such as consumer and manufacturing were directly affected by this uncertainty, while the Banking, Financial Services, and Insurance (BFSI) sector showed resilience.
Motilal Oswal Financial Services (MOFSL) expressed similar concerns, predicting that the first quarter of FY26 could see a decline in revenues for Wipro and other large-cap companies in the IT sector. They revised their earnings estimates for FY26 and FY27 downward by approximately 4%, reiterating a 'Sell' rating on Wipro with a target price of ₹215.
Wipro's management aims to maintain margins within a narrow band going forward, focusing on sustaining or improving utilization, enhancing fixed-price productivity, and rationalizing overhead costs. However, analysts remain cautious, pointing out that the softness in demand is expected to persist into the first quarter of FY26.
The decline in Wipro's stock price reflects broader concerns in the IT sector, where companies are grappling with a challenging global environment. As investors closely monitor the company's ability to navigate these challenges, the focus will be on how effectively Wipro can convert its deal pipeline into revenue and stabilize its operations, particularly in Europe.
In the wake of the earnings report, Wipro's American Depositary Receipts (ADRs) also experienced a decline, closing 3.20% lower at $2.73 in New York. This trend underscores the international market's reaction to the company's cautious guidance and the broader economic climate.
As Wipro continues to adapt to the evolving landscape of the IT services industry, the coming months will be critical in determining its path forward. Investors and analysts alike will be keeping a close eye on the company's performance, particularly in light of its recent challenges and the uncertain macroeconomic environment.
In summary, Wipro's fourth-quarter results showcased a strong profit increase, yet the decline in IT services revenue and cautious guidance for FY26 have raised red flags for investors. With brokerages adjusting their outlook and target prices, the company faces an uphill battle in regaining investor confidence amidst a challenging economic backdrop.
