Investing.com -- Wipro (NSE:WIPR), one of India’s largest IT services firms, saw its shares close lower at 4.1% on Thursday following the release of its fourth-quarter results for FY25 on Wednesday, which fell short of market expectations.
While the company managed solid margin performance and posted strong deal wins, the weaker-than-expected revenue results, coupled with cautious forward guidance, raised concerns about its growth prospects.
The company’s poor guidance for Q1FY26, combined with macroeconomic headwinds, led analysts to revise their estimates, with many questioning the sustainability of Wipro (NYSE:WIT)’s growth trajectory.
Wipro’s fourth-quarter revenue stood at $2,597 million, marking a 0.8% decline from the previous quarter.
The results was below consensus estimates, with analysts like Nomura commenting, “Wipro’s 4QFY25 revenue of $2,597 million missed expectations with a 0.8% QoQ decline, but EBIT margin was slightly ahead of consensus.”
Despite the revenue miss, Wipro’s EBIT margin of 17.5% was slightly better than anticipated, providing a silver lining in an otherwise disappointing quarter.
However, the company has guided for a decline in revenue for Q1FY26, forecasting a drop of between 3.5% and 1.5% QoQ in constant currency terms.
This soft guidance, much below analysts’ expectations, led J.P. Morgan to note, “Wipro’s weak 1Q guide is likely the first sign of sector impact from US tariffs on tech spending, putting our recently cut FY26 estimates at risk for all coverage companies.”
The company’s guidance also pointed to soft demand, particularly in large transformation projects and discretionary spending.
Wipro flagged that clients are turning increasingly cautious, especially in the manufacturing and consumer verticals, due to the uncertain macroeconomic environment and tariff-related pressures.
Investec (LON:INVP) echoed this concern, stating, “Despite EBIT margin stability, Wipro’s weak Q1FY26 guidance is a concern, with revenue expected to fall 3.5% to 1.5% QoQ.”
This cautionary outlook, coupled with the slowdown in key verticals such as retail, consumer, and automotive, raised alarms about the company’s ability to maintain consistent growth.
The company’s challenges were further highlighted by Goldman Sachs, which noted, “Wipro’s revenue remains at Sep ’21 levels – essentially no growth for 14 quarters.”
Analysts pointed out that, despite solid deal wins and a healthy deal pipeline, Wipro has struggled to break its growth stagnation.
While large deal TCV grew 83% QoQ to $1.8 billion, reflecting some strength in big-ticket bookings, the overall revenue decline across key segments like healthcare, consumer, and BFSI remained a major concern.
Goldman Sachs added, “We see limited signs of Wipro closing its growth gap with peers. Risks of multiple de-rating remain.”
Despite the ongoing challenges, some analysts remain cautiously optimistic about Wipro’s long-term prospects.
UBS, for instance, believes that Wipro’s struggles are temporary, driven by short-term factors such as slower client decision-making and changing project scopes.
They remain hopeful for a recovery in discretionary spending, with UBS stating, “The pain is real but more importantly, is it transitory or structural? We believe it’s the former; it’s a pause and not lost.”
UBS further added that, “We expect revenue growth trajectory to improve post Q1, and any early signs of recovery in discretionary spending are likely to drive expansion in multiples.”
On the other hand, BofA Securities remains bearish, emphasizing Wipro’s underperformance compared to its peers.
They flagged, “we think that the recovery can get slow in a tough climate & expect that the underperformance to peers on revenue growth could continue in the near term as enterprises look to consolidate their spends a tough macro.”
This was echoed by Nomura, which adjusted its FY26 revenue growth estimate to a contraction of 3.9%, down from a previous forecast of flat growth, with analysts pointing to continued pressure from weak demand in key verticals.