Wipro ADRs declined nearly 6% on the New York Stock Exchange following the release of third-quarter results that revealed mixed performance indicators. Investors reacted negatively to weaker year-on-year profit growth and subdued deal momentum, despite the company showing improvements in margins and strong cash generation capabilities.

Financial Performance Overview

The IT services firm reported a challenging quarter with consolidated net profit declining 7% year-on-year to ₹3,119.00 crore for the third quarter. However, revenue demonstrated steady momentum, rising 6% year-on-year to ₹23,556.00 crore, supported by sequential growth in its core IT services business.

Adjusted for the one-time impact related to labour code changes, net income stood at ₹3,360.00 crore, reflecting a 3.6% sequential increase and 0.3% growth over the previous year. This adjustment indicates that underlying profitability remained relatively stable despite demand softness in certain markets.

IT Services Segment Performance

The company's IT services segment generated revenue of $2.64 billion, representing a 1.2% quarter-on-quarter increase and marginal 0.2% year-on-year growth. In constant currency terms, revenue rose 1.4% sequentially but declined 1.2% year-on-year, highlighting continued pressure from pricing challenges and slower discretionary spending, particularly in developed markets.

Operationally, Wipro delivered strong margin performance with IT services operating margin expanding to 17.6%. This marked a significant 90-basis-point improvement sequentially and a 10-basis-point rise year-on-year, driven by tighter cost controls, better utilisation rates, and improved execution discipline.

Deal Activity and Market Challenges

Deal activity remained a primary concern for investors, with total contract bookings for the quarter reaching $3.3 billion, down 5.7% year-on-year in constant currency terms. Large deal wins were particularly affected, with bookings at $871 million reflecting an 8% year-on-year decline.

These figures highlight cautious client spending patterns and elongated decision cycles that continue to impact the IT services sector.

Shareholder Returns and Future Outlook

Despite the mixed performance, the board declared an interim dividend of ₹6.00 per share, with January 27 fixed as the record date. The dividend is scheduled to be paid on or before February 14, reinforcing the company's commitment to shareholder returns even amid a challenging demand environment.

Management maintained a cautious but steady outlook for the March 2026 quarter, guiding IT services revenue in the range of $2.64 billion to $2.69 billion. This guidance implies flat to 2% sequential growth in constant currency terms. Chief Executive Officer Srini Pallia noted that the company delivered broad-based growth in line with internal expectations, emphasizing that artificial intelligence is increasingly emerging as a key differentiator through rising adoption of AI-enabled platforms and expansion of the global innovation network.

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.