Wipro and LTIMindtree have seen their stock rallies under new leadership quickly evaporate as investors responded negatively to recent quarterly results, despite both companies beating revenue expectations. The sharp declines highlight broader challenges facing India's IT sector, including AI-led automation pressures and tariff uncertainty that continue to weigh on growth prospects.

Wipro's Steep Decline Despite Revenue Beat

Wipro's stock performance tells a dramatic story of investor sentiment shifts. From April 7, 2024, when Pallia took over as chief executive, to January 16, 2026, the stock had gained 10.16%. However, this rally quickly reversed following the company's December-quarter results announcement.

The company reported $2.64 billion in revenue, up 1.20% sequentially and beating analyst expectations. Despite this positive surprise, the stock plunged 8.00% when markets reopened on Monday and declined another 1.30% by 11:15 am on Tuesday, taking the total decline to 9.30% in less than two trading sessions.

Factors Behind Wipro's Investor Concerns

Three primary factors contributed to the stock's decline: tepid growth outlook, weak organic growth expectations, and delayed deal ramp-ups. Management provided fourth-quarter revenue guidance of $2.64-2.69 billion, implying a potential decline at the lower end of the range.

ICICI Securities analysts highlighted concerns about organic growth, noting that "Wipro guides for 0-2% QoQ CC revenue growth for Q4FY26, lower than current quarter sequential growth at mid-point. Q4 growth could be aided by a two-month incremental contribution of around 1.60% from the Harman DTS acquisition, implying weak organic growth of -1.60% to 0.50% QoQ CC."

Aparna Iyer, Wipro's chief financial officer, acknowledged delays in large deal ramp-ups during the January 16 post-earnings call, stating that "some of the other deals, given the nature of the deals that we have won, we have earlier also highlighted that these deals will take a few quarters to ramp up."

LTIMindtree Faces Similar Investor Punishment

LTIMindtree experienced a parallel situation, though to a lesser extent. From May 31, 2025, when Lambu became chief executive, to January 19, 2026, the company's shares had risen 26.36%. The company then announced strong quarterly results with $1.21 billion in Q3 revenue, up 2.40% from the preceding quarter, marking its best third-quarter performance in three years.

Despite the strong performance, investors remained displeased, causing shares to fall 7.30% between Monday and 11:15 am on Tuesday, wiping off more than a fourth of the gains since Lambu's appointment.

AI-Led Disruption in Key Accounts

Motilal Oswal Financial Services analysts attributed much of LTIMindtree's decline to AI-induced challenges in top client accounts. They noted that "AI-led productivity initiatives at large clients continue to affect near-term growth, particularly within the top five accounts. However, the intensity of this impact appears to be moderating, with four of the top five clients having largely completed their productivity programs."

Broader IT Sector Challenges

The individual company struggles reflect wider sectoral headwinds. The Nifty IT index dropped 0.50% to 25,469.45 points as of 11:45 am on Tuesday, driven by uncertain outlooks from major IT outsourcers. Four of India's largest IT services companies are heading into the final quarter with weaker full-year trajectories compared to the previous year.

This challenging environment points to a third consecutive year of sluggish growth for India's IT majors, as automation, AI-led pricing pressure, and tariff uncertainty continue to cloud demand visibility across the sector.

Wipro has received a Hold rating from Prabhudas Lilladher with a target price of ₹260, reflecting mixed performance indicators and cautious outlook for the IT services company.

Q3 Performance Analysis

The company's Q3 revenue growth demonstrated resilience with a 1.4% quarter-on-quarter increase in constant currency terms, aligning closely with analyst estimates of 1.5% QoQ growth. The performance was bolstered by strategic initiatives and acquisitions.

Despite facing negative seasonality in Capco, the company achieved positive organic growth of 0.6% QoQ in constant currency. This growth was multi-faceted across various business units, including Financial Services, indicating broad-based momentum.

Q4 Outlook and Challenges

The organic growth momentum faces headwinds in Q4 due to execution deferrals in large deals, particularly affecting the NN component. The brokerage's analysis suggests Q4 organic guidance of -1.5% to +0.5% QoQ in constant currency, which translates to a two-month inorganic contribution of +1.5% QoQ.

The guidance becomes more concerning when considering the expected improvement in Capco seasonality during Q4, suggesting underlying business softness beyond seasonal factors.

Deal Pipeline and Execution

While the company has shown strong performance in securing business, execution remains a key challenge:

• Large deals for 9MFY26 increased by 77% year-on-year
• Bookings grew by 25% year-on-year
• Execution challenges persist despite improved deal wins

Margin Outlook and Integration Impact

The full integration of Harman is expected to dilute service margins in FY27 before integration benefits materialize in FY28E. This temporary margin pressure reflects the investment phase of the acquisition.

Investment Recommendation

Prabhudas Lilladher assigns a 17x multiple to FY28 EPS, resulting in a target price of ₹260. The Hold rating reflects a balanced view of the company's growth prospects, considering both the positive deal momentum and execution challenges ahead.