Wipro management has struck a measured yet confident tone while outlining its near-term outlook, highlighting steady demand momentum, an AI-first execution strategy, and sustained focus on margins despite cautious client spending on discretionary projects.

Revenue Guidance and Market Outlook

The company provided Q4 revenue guidance reflecting the current market environment:

CEO Srini Pallia explained that the broader demand environment continues to be shaped by vendor consolidation and increasing adoption of AI-led programmes. "So, if you look at demand from year 2025 to 2026, the theme of vendor consolidation clearly continues, and that is something that we will stay focused on," Pallia said.

AI-First Strategy and Pipeline Transformation

Wipro has embedded AI across its entire pipeline following the launch of Wipro Intelligence, which includes delivery platforms WINGS and WEGA. Pallia emphasized the comprehensive nature of this transformation: "The way we look at the pipeline today is that every opportunity in our pipeline will be AI-first and AI-led."

The AI integration covers multiple service areas:

• Run and Operate: WINGS platform for application support, infrastructure support, and business processes
• Software Development: WEGA tool for build and transform projects
• Advisory Services: Data, security, and change management solutions
• AI Rewrites: Helping clients reimagine processes leveraging AI

Strong Margin Performance

CFO Aparna Iyer highlighted the company's robust profitability metrics:

"We have been consistently improving our operating margins over the last eight quarters or so, and full credit goes to the entire team for the execution rigour all around," Iyer said. The improvement came through multiple levers including enhanced profitability in fixed-price programmes, improved utilization, and optimized SG&A expenses.

Workforce and Operational Updates

Chief Human Resources Officer Saurabh Govil provided updates on hiring and regulatory provisions:

The labour code provision relates primarily to gratuity calculations following recent regulatory clarifications. Govil noted that lateral hiring will continue based on skill and project demand, particularly in data, SAP, and engineering areas.

Sector-Specific Challenges and Opportunities

Regarding business conditions in BFSI and North America, Pallia acknowledged ongoing uncertainty but identified positive underlying trends. He noted that cost optimization and vendor consolidation efforts are creating room for future discretionary spending: "The main reason clients are doing this is to improve their cost structures so that they can position themselves for more discretionary spend, which then translates into more AI projects."

Overall, Wipro's leadership believes the pipeline remains structurally strong, anchored by AI-led transformation, even as near-term revenue growth remains cautious and execution-focused.

Wipro shares experienced a sharp decline of 9% in early trading on Monday following a downgrade from Morgan Stanley and concerns over the company's fourth-quarter guidance. The IT services major closed at ₹242.80, reflecting investor concerns about the company's near-term growth prospects.

Morgan Stanley Downgrade Details

Morgan Stanley downgraded Wipro from "equalweight" to "underweight" and significantly reduced its price target. The brokerage's revised outlook reflects concerns about the company's execution capabilities and competitive positioning.

The brokerage noted that while Wipro had previously shown improvement in deal wins and margin performance, helping narrow the price-to-earnings multiple gap with peers over the past 12 months, recent developments suggest this convergence may reverse.

Weak Q4 Guidance Triggers Concerns

Wipro's guidance for the fourth quarter has disappointed analysts and investors alike. The company projected constant currency revenue growth significantly below market expectations, indicating challenges in converting pipeline deals into actual revenue.

Morgan Stanley highlighted that this weaker guidance suggests slower deal conversion rates and reduced growth visibility for the upcoming financial year compared to industry peers. The brokerage expects this performance gap to widen the price-to-earnings multiple discount that had recently narrowed.

Broader Analyst Sentiment

Jefferies maintained its cautious stance on Wipro, keeping its "underperform" rating with a ₹220 price target. The brokerage cited softer deal bookings and delays in project ramp-ups as key factors behind the disappointing guidance. Additionally, Jefferies expects margin pressure to continue due to recent acquisitions and the gradual scaling of new deals.

The overall analyst community remains divided on Wipro's prospects. Among 47 analysts covering the stock, the distribution reflects mixed sentiment:

• Buy ratings: 11 analysts (23.40%)
• Hold ratings: 21 analysts (44.68%)
• Sell ratings: 15 analysts (31.91%)

Market Performance

Wipro's stock performance reflected the negative sentiment across markets. The company's American Depositary Receipts (ADRs) had already declined 7.40% in Friday's trading session on Wall Street, foreshadowing Monday's domestic market reaction. The 9.30% decline in Indian markets brought the stock price to ₹242.80, aligning closely with Morgan Stanley's revised price target.