Wipro shares tumbled over 9% in early trade following the company's mixed third-quarter results and cautious outlook for Q4. The IT services major's stock hit an early low of Rs 241.55, trading at Rs 247.40 with a 7.5% decline as brokerages remained divided on the company's prospects despite margins beating expectations.

Q3 Financial Performance Analysis

The company reported a net profit of Rs 3,119.00 crore for the third quarter, marking a 7% year-on-year decline. Gross revenue rose marginally to Rs 23,560.00 crore, up 0.2% year-on-year, while IT services revenue reached $2.60 billion with sequential constant-currency growth of 1.4%.

The sequential revenue growth came in at the upper end of guidance, though analysts noted that organic momentum remains weak with organic growth at just 0.6%.

Margin Performance and Operational Metrics

Consolidated margins contracted to 14.80% due to one-off impacts from the new labour code and restructuring costs. However, IT services margins showed improvement to 17.60% despite seasonal weakness and ramp-up costs for a large Phoenix deal.

Q4 Guidance and Harman Acquisition Impact

Wipro provided Q4 guidance of 0-2% constant currency growth, with the recently announced Harman acquisition expected to contribute significantly. The company revised its fresher hiring guidance for FY26 to 7,500-8,000 graduates, down from the original target of 10,000-12,000.

Mixed Brokerage Reactions

Brokerages delivered contrasting assessments of Wipro's performance. HDFC Securities maintained an optimistic tone with an "add" rating and target price of Rs 290, highlighting the company's return to growth trajectory. JM Financial retained a "buy" rating despite describing the quarter as "lacklustre," citing undemanding valuations and potential for capital returns.

Elara Capital remained firmly bearish, reiterating its "sell" rating while raising the target price to Rs 220, emphasizing that organic growth is likely to stay weak despite Harman's contribution.

Sector Challenges and Deal Pipeline

The company faced headwinds across multiple verticals, with growth impacted by slower ramp-up of large deals and weakness in the EMR vertical. While some recovery was noted in the BFSI segment, other areas including energy and consumer verticals continued to struggle with tariff-related challenges and deal pauses.

The mixed performance reflects broader challenges in the IT services sector, with analysts emphasizing that better execution and stable conversion of deal TCV into revenue will be critical for improved outlook.

Wipro has addressed recent policy developments affecting the IT services sector, with a company executive providing clarity on the organization's stance regarding new H-1B visa regulations and labor code changes.

H-1B Visa Policy Response

A Wipro executive discussed the company's approach to new H-1B visa regulations, indicating that the organization is actively considering its options in response to the policy changes. The statement suggests that Wipro is taking a measured approach to evaluate how these immigration policy modifications may affect its operations and workforce planning.

Labor Code Impact Assessment

Regarding recent labor code changes, the executive provided reassurance about the company's operational stability. The representative noted that Wipro does not expect any ongoing impact from the labor code modifications, suggesting that the company's current operations and business processes remain largely unaffected by these regulatory updates.

Strategic Considerations

The executive's comments reflect the broader challenges facing IT services companies as they navigate evolving regulatory landscapes. The measured response indicates that Wipro is taking time to assess the implications of policy changes before making strategic decisions about workforce management and operational adjustments.

These developments come at a time when IT services companies are closely monitoring immigration and labor policy changes that could influence their ability to deploy talent and manage cross-border operations effectively.