Wipro Q3 Results: Revenue Beats Estimates Despite Margin Pressure, Deven Choksey Sets ₹272 Target

Wipro delivered a mixed third-quarter performance, with revenue beating analyst estimates despite facing margin pressures from elevated costs. The IT services major reported steady demand traction across key international markets, though profitability metrics came under pressure.

Financial Performance Overview

The company's quarterly results showed strong revenue performance but weaker profitability metrics compared to estimates and previous periods.

Metric	Q3 Performance	Growth (QoQ)	Growth (YoY)	vs Estimate
Revenue	₹23,556 crores	+3.8%	+5.5%	+4.1% beat
EBITDA	₹4,379 crores	-1.1%	-4.3%	-0.9% miss
Net Profit	₹3,145 crores	-3.6%	-6.6%	-1.6% miss

Margin Analysis

Profitability margins faced significant pressure during the quarter, reflecting the impact of rising operational costs.

Margin Type	Q3 Performance	Q2 Performance	YoY Change
EBITDA Margin	18.6%	19.5%	-90 bps
PAT Margin	13.2%	-	-179 bps

The EBITDA margin decline was primarily attributed to higher employee costs and elevated general and administrative expenses, which offset the benefits of operating leverage. Net profit margin compression of 179 basis points year-on-year reflected both operating margin pressure and higher effective tax outgo.

Regional Performance

Geographical revenue mix remained broadly stable sequentially, with varying performance across different regions:

Europe: 26.7% of revenue, sustaining growth momentum
APMEA: 11.1% of revenue, maintaining growth trajectory
Americas 2: 29.0% of revenue, remained soft and weighed on overall topline acceleration

The steady demand traction and improved execution across Europe and APMEA regions helped drive the better-than-expected revenue performance, while softness in Americas 2 continued to pose challenges.

Analyst Outlook and Valuation

Deven Choksey projects revenue and earnings compound annual growth rates of 3.6% and 1.1% respectively over FY25-FY27E. The brokerage maintains an 'Accumulate' rating on the stock with a target price of ₹272, applying a price-to-earnings multiple of 20x to December 2027 estimated earnings per share. The stock currently trades at 19.8x FY27E earnings, suggesting modest upside potential based on the analyst's valuation framework.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-2.42%	-8.78%	-9.25%	-10.10%	-20.07%	+11.56%

Wipro has announced that a decision regarding salary hikes will be made shortly after senior management returns from the World Economic Forum in Davos. The IT services provider last raised salaries in September 2024, making it over a year since the previous increment. CHRO Saurabh Govil confirmed the timeline during discussions following the company's third-quarter earnings announcement on January 16.

Strong Q3 Financial Performance

The company delivered robust financial results for the third quarter, with several key metrics showing improvement:

Metric	Q3 Performance	Details
Revenue Growth	1.4%	Total quarterly growth
Organic Growth	0.6%	Excluding acquisitions
Operating Margins	17.6%	One of best performances in recent quarters
Market Performance	3 of 4 markets	Sequential growth achieved
Industry Sectors	4 of 5 sectors	Sequential growth recorded

CEO Srini Pallia highlighted that the revenue growth included contributions from the HARMAN acquisition, with organic growth remaining within company guidance. CFO Aparna Iyer noted that the 17.6% margin represents one of their strongest performances, remaining stable over the last eight quarters.

Workforce Management and Hiring Plans

Wipro demonstrated positive trends in workforce stability and expansion during the quarter:

Attrition and Retention

Employee attrition declined by more than 2% in the October-December quarter
Similar attrition levels expected to continue in the fourth quarter
Improved employee retention contributing to operational stability

Fresher Recruitment Strategy

Parameter	Q3 Actual	Q4 Planned	FY Total Target
Fresher Hiring	5,400	2,000-2,500	7,500-8,000
Campus Placements	Muted activity	Increased focus	Full-year target

The company's hiring strategy reflects confidence in demand recovery and business growth prospects for the coming quarters.

Operational Improvements and Cost Management

CFO Aparna Iyer attributed the margin improvement to several operational factors:

Cost Control Measures: Optimized selling, general, and administrative expenses
Higher Utilization Rates: Improved employee productivity and project allocation
Fixed-Price Project Performance: Better profitability in fixed-price engagements
HARMAN Integration: Successfully absorbed one month impact of HARMAN DTS acquisition

The company plans to factor in two additional months of the HARMAN acquisition impact in the next quarter while continuing investments in client relationships and large deal pipeline opportunities.

Market Challenges and Strategic Response

Wipro's leadership acknowledged specific sector challenges while maintaining optimism about pipeline strength:

Sector-Specific Impacts

Manufacturing and Retail: Reduced discretionary spending due to tariff uncertainty
Cost Optimization Focus: Clients seeking vendor consolidation and operational efficiency
Geopolitical Factors: Global trade tensions affecting client decision-making

Pipeline and Deal Activity

Deal Category	Performance	Outlook
Large Deals	$870 million in Q3	Strong pipeline across sectors
YTD Growth	70%+ year-over-year	Commendable performance
Average Target	~$1 billion annually	On track for full-year goals

Despite Q3 large deal wins being lower than recent quarterly averages, management emphasized the binary nature of large deals and highlighted strong year-to-date performance with over 70% growth.

Future Outlook and Investment Strategy

Wipro maintains its focus on growth investments while managing operational efficiency. The company operates within its aspirational margin band of 17-17.5% and continues investing in client relationships and large deal conversions. With current market capitalization at ₹2,80,262.09 crore, the company aims to balance growth investments with margin sustainability in a competitive landscape.