The quarter presented a mixed picture: whilst revenue growth remained anaemic at 2.54% QoQ and 1.77% YoY to ₹22,697.30 crores, operating margins showed resilience at 19.26%, and the company maintained its strong balance sheet with zero net debt. However, the sequential profit decline and continued pressure on employee costs underscore the challenges facing India's IT sector amidst global economic uncertainty.
The September quarter results arrive at a critical juncture for the Indian IT industry, which has been grappling with demand slowdowns, pricing pressures, and client budget constraints across key markets. Wipro's performance, whilst demonstrating operational stability, reflects the broader sector malaise that has seen IT stocks underperform the broader market throughout 2025.
Financial Performance: Steady Revenues, Margin Resilience
Wipro's Q2 FY26 revenue of ₹22,697.30 crores represented a 2.54% sequential increase from Q1 FY26's ₹22,134.60 crores, marking the company's second consecutive quarter of positive QoQ growth. However, the year-on-year comparison reveals a more sobering picture, with revenue advancing just 1.77% from ₹22,301.60 crores in Q2 FY25. This tepid growth trajectory stands in stark contrast to the company's historical performance and reflects the challenging demand environment across its key verticals.
On the profitability front, operating profit before depreciation, interest, tax, and other income (PBDIT excluding OI) reached ₹4,372.40 crores, translating to an operating margin of 19.26%. This represented a 14 basis point improvement from Q1 FY26's 19.12% but remained below the 20.55% achieved in Q4 FY25. The margin expansion, though modest, demonstrates management's continued focus on operational efficiency despite revenue headwinds.
Net profit for Q2 FY26 stood at ₹3,231.00 crores, down 2.84% sequentially from ₹3,325.40 crores but up 0.70% year-on-year from ₹3,208.50 crores. The PAT margin contracted to 14.31% from 15.05% in the previous quarter, primarily due to a higher effective tax rate of 23.82% compared to 21.65% in Q1 FY26. This tax rate normalisation, following an unusually low rate in the previous quarter, impacted bottom-line growth despite stable operating performance.
Employee costs, the largest expense component for IT services firms, increased to ₹13,616.30 crores in Q2 FY26 from ₹13,427.50 crores in Q1 FY26, representing a 1.41% sequential rise. This increase, though moderate, continues to pressure margins and reflects the ongoing challenge of balancing talent retention with cost optimisation in a competitive labour market.
| Quarter | Revenue (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | Operating Margin | PAT Margin |
|---|---|---|---|---|---|---|
| Sep'25 | 22,697.30 | 2.54% | 3,231.00 | -2.84% | 19.26% | 14.31% |
| Jun'25 | 22,134.60 | -1.64% | 3,325.40 | -6.08% | 19.12% | 15.05% |
| Mar'25 | 22,504.20 | 0.83% | 3,540.50 | 5.58% | 20.55% | 15.81% |
| Dec'24 | 22,318.80 | 0.08% | 3,353.30 | 4.51% | 20.34% | 15.08% |
| Sep'24 | 22,301.60 | 1.54% | 3,208.50 | 6.68% | 20.19% | 14.47% |
| Jun'24 | 21,963.80 | -1.10% | 3,007.70 | 5.36% | 19.82% | 13.85% |
| Mar'24 | 22,208.30 | 0.01% | 2,854.80 | 5.95% | 19.82% | 12.96% |
| Dec'23 | 22,205.10 | -1.38% | 2,694.60 | 1.71% | 18.91% | 12.16% |
Operational Excellence: Strong Capital Efficiency Despite Growth Challenges
Wipro's operational metrics reveal a company navigating turbulent waters with commendable efficiency. The company's Return on Equity (ROE) of 15.95% for Q2 FY26, whilst marginally below the five-year average of 16.75%, demonstrates robust capital efficiency. This ROE level positions Wipro competitively within the IT sector and reflects management's ability to generate solid returns for shareholders despite the challenging growth environment.
The company's Return on Capital Employed (ROCE) of 31.24% stands as a testament to its operational excellence. This metric, significantly above the five-year average of 29.70%, indicates that Wipro continues to deploy capital effectively and generate strong returns from its operating assets. The elevated ROCE, combined with a healthy ROE, underscores the quality of the company's business model and its ability to maintain profitability even during demand slowdowns.
Wipro's balance sheet remains a fortress of strength. The company maintains a net cash position of ₹37,163 crores, with zero net debt to equity ratio. Total cash and equivalents stood at ₹12,197 crores as of March 2025, providing substantial financial flexibility for strategic investments, acquisitions, or enhanced shareholder returns. This pristine balance sheet, combined with consistent cash flow generation of ₹16,942 crores from operations in FY25, positions Wipro favourably to weather economic uncertainties.
Key Strength: Zero-Debt Balance Sheet
Wipro operates with a net cash position of ₹37,163 crores, providing significant financial flexibility. The company's debt-to-equity ratio of 0.00 and interest coverage ratio of 16.28x underscore its financial stability and ability to navigate market volatility without balance sheet constraints.
However, the company faces headwinds in revenue growth, with five-year sales CAGR of just 7.81% reflecting the mature nature of its core markets and intensifying competition. The flat financial trend designation for the most recent quarter signals that management faces challenges in accelerating growth momentum, despite maintaining operational efficiency.
Industry Context: Navigating Sector-Wide Demand Softness
The Indian IT services sector has confronted significant headwinds throughout 2025, with clients across key verticals exercising caution on discretionary spending amidst global economic uncertainty. Wipro's modest 1.77% YoY revenue growth, whilst underwhelming in absolute terms, must be contextualised against the broader sector performance. The IT-Software sector has declined 19.06% over the past year, making Wipro's 4.65% decline appear relatively resilient, with the company outperforming its sector by 14.41 percentage points.
Client budget constraints have been particularly acute in the BFSI (Banking, Financial Services, and Insurance) vertical, traditionally a strong revenue contributor for Indian IT firms. Technology spending has shifted towards cloud migrations and digital transformation initiatives, creating both opportunities and challenges as companies navigate the transition from legacy systems to modern architectures.
Margin pressures across the sector stem from multiple sources: wage inflation in key talent pools, pricing pressures from clients seeking cost optimisation, and investments in emerging technologies such as artificial intelligence and generative AI capabilities. Wipro's ability to maintain operating margins above 19% demonstrates relative operational discipline, though the company has sacrificed some margin expansion opportunities to remain competitive on pricing.
Sector Positioning: Outperforming Peers on Stock Returns
Whilst Wipro's stock has declined 4.65% over the past year, this performance significantly outpaces the IT-Software sector's 19.06% decline. The company's relative resilience reflects investor confidence in its balance sheet strength, dividend yield, and operational stability despite growth challenges.
Peer Comparison: Valuation Discount Reflects Growth Concerns
Wipro's valuation metrics reveal a company trading at a significant discount to peers, reflecting market concerns about its growth trajectory. The company's price-to-earnings ratio of 19.48x compares favourably to the peer average of approximately 28x, with Infosys at 22.46x, HCL Technologies at 23.93x, Tech Mahindra at 31.87x, and LTI Mindtree commanding a premium 35.32x multiple.
The valuation discount appears justified when examining profitability metrics. Wipro's ROE of 15.95%, whilst respectable, trails peers such as Infosys (28.72%) and LTI Mindtree (20.26%). This lower return on equity, combined with slower growth momentum, explains the market's reluctance to accord Wipro valuation parity with sector leaders.
| Company | P/E (TTM) | P/BV | ROE (%) | Dividend Yield (%) | Debt/Equity |
|---|---|---|---|---|---|
| Wipro | 19.48 | 3.18 | 15.95 | 4.39 | -0.41 |
| Infosys | 22.46 | 6.45 | 28.72 | 2.92 | -0.28 |
| HCL Technologies | 23.93 | 0.57 | 2.38 | 4.01 | -0.36 |
| Tech Mahindra | 31.87 | 5.22 | 15.54 | 3.08 | -0.20 |
| LTI Mindtree | 35.32 | 7.34 | 20.26 | 1.16 | -0.39 |
However, Wipro offers compelling value in other dimensions. Its dividend yield of 4.39% stands as the highest amongst major peers, providing income-oriented investors with attractive cash returns. The company's price-to-book ratio of 3.18x, whilst reflecting its decent ROE, trades at a substantial discount to Infosys (6.45x) and LTI Mindtree (7.34x), suggesting potential value for patient investors willing to wait for growth acceleration.
Valuation Analysis: Attractive Entry Point for Value Seekers
At the current market price of ₹253.75, Wipro's valuation presents an intriguing proposition for value-oriented investors. The stock's P/E ratio of 19.76x sits comfortably below its historical averages and peer multiples, whilst the P/BV ratio of 3.23x appears reasonable given the company's ROE profile. The proprietary valuation assessment classifies Wipro as "ATTRACTIVE", with the stock recently transitioning from "Very Attractive" territory.
The company's enterprise value multiples provide additional perspective. An EV/EBITDA of 12.95x and EV/Sales of 2.60x position Wipro at the lower end of sector valuations, reflecting market scepticism about near-term growth prospects. However, these metrics also suggest limited downside risk, particularly given the company's strong balance sheet and consistent cash generation.
Wipro's PEG ratio of 0.98x indicates that the stock trades roughly in line with its growth rate, a rarity in today's market where many technology companies command significant growth premiums. For investors willing to look beyond near-term growth challenges, this valuation suggests potential for appreciation as demand conditions normalise.
The stock's 52-week range of ₹225.05 to ₹324.55 illustrates the volatility IT stocks have experienced. Trading 21.81% below its 52-week high but 12.75% above its low, Wipro finds itself in a middle ground that neither excites growth investors nor alarms value seekers. The recent valuation grade change from "Attractive" to "Very Attractive" and back suggests the stock hovers near fair value, with tactical opportunities emerging on weakness.
Shareholding Pattern: Stable Promoter Base, Modest Institutional Interest
Wipro's shareholding pattern reflects a company with dominant promoter control and moderate institutional participation. As of June 2025, promoter holding stood at 72.66%, marginally declining from 72.73% in March 2025 and 72.80% in September 2024. This minimal erosion of 14 basis points over three quarters indicates stable promoter commitment, with founder Azim Premji's entities maintaining their substantial stakes.
Foreign Institutional Investor (FII) holdings decreased to 8.16% in June 2025 from 8.35% in the previous quarter, representing a net outflow. This 19 basis point reduction, following a 68 basis point increase in March 2025, suggests cautious foreign investor sentiment towards the stock. The number of FIIs holding the stock declined from 908 to 869, indicating some institutional exits during the quarter.
| Category | Jun'25 | Mar'25 | Dec'24 | QoQ Change |
|---|---|---|---|---|
| Promoter | 72.66% | 72.73% | 72.75% | -0.07% |
| FII | 8.16% | 8.35% | 7.67% | -0.19% |
| Mutual Funds | 4.29% | 4.08% | 4.29% | +0.21% |
| Insurance | 3.08% | 3.05% | 3.69% | +0.03% |
| Other DII | 3.16% | 3.12% | 2.75% | +0.04% |
| Non-Institutional | 8.65% | 8.66% | 8.74% | -0.01% |
Domestic institutional investors showed mixed behaviour. Mutual fund holdings increased to 4.29% from 4.08%, a positive 21 basis point uptick suggesting renewed domestic interest. Insurance company holdings edged up marginally to 3.08% from 3.05%, whilst other DII holdings rose to 3.16% from 3.12%. These incremental increases in domestic institutional participation provide modest support, though total institutional holdings of 18.30% remain relatively modest for a large-cap IT stock.
The absence of promoter pledging (0.00%) reinforces confidence in the company's financial stability and promoter commitment. With no encumbered shares, investors face no risk of distressed selling from promoter entities, a reassuring factor in volatile market conditions.
Stock Performance: Underperformance Reflects Sector Weakness
Wipro's stock performance over the past year paints a picture of sustained underperformance against broader market indices. The stock has declined 4.65% over one year, significantly lagging the Sensex's 2.41% gain, resulting in negative alpha of 7.06 percentage points. This underperformance intensifies over longer timeframes, with the stock generating negative alpha across virtually all periods examined.
Year-to-date performance has been particularly challenging, with Wipro declining 15.98% compared to the Sensex's 6.82% gain, producing negative alpha of 22.80 percentage points. The recent three-month period saw the stock fall 3.41% whilst the Sensex advanced 1.01%, continuing the trend of relative weakness. Even the one-week and one-month periods, showing returns of 3.02% and -0.06% respectively, generated negative alpha when compared to benchmark performance.
| Period | Wipro Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 3.02% | 1.58% | +1.44% |
| 1 Month | -0.06% | 1.32% | -1.38% |
| 3 Months | -3.41% | 1.01% | -4.42% |
| 6 Months | 2.53% | 8.34% | -5.81% |
| YTD | -15.98% | 6.82% | -22.80% |
| 1 Year | -4.65% | 2.41% | -7.06% |
| 2 Years | 23.75% | 26.15% | -2.40% |
| 3 Years | 34.51% | 44.11% | -9.60% |
The stock's technical positioning reflects this fundamental weakness. Currently trading in a "mildly bearish" trend that commenced on 10th October 2025 at ₹248.70, Wipro faces resistance at multiple levels. The 20-day moving average of ₹245.93, 100-day moving average of ₹252.77, and 200-day moving average of ₹265.26 all represent overhead resistance levels that the stock must overcome to establish a sustainable uptrend.
Risk-adjusted returns paint an even more concerning picture. With a one-year volatility of 25.93%, significantly higher than the Sensex's 12.51%, Wipro exhibits elevated risk without commensurate returns. The negative risk-adjusted return of -0.18 and negative Sharpe ratio classify the stock as "MEDIUM RISK LOW RETURN", an unattractive combination for most investors.
"Whilst Wipro's fundamentals remain solid with strong balance sheet metrics and consistent profitability, the stock's persistent underperformance reflects investor concerns about growth acceleration and competitive positioning in an evolving technology landscape."
Investment Thesis: Quality Company at Fair Valuation
Wipro's investment thesis rests on three pillars: quality, valuation, and dividend yield. The company maintains a "GOOD" quality grade, sustained for 34 consecutive quarters since June 2016, reflecting consistent operational performance and financial stability. This quality assessment stems from the company's zero-debt balance sheet, strong cash generation capabilities, absence of promoter pledging, and respectable profitability metrics including ROE of 15.95% and ROCE of 31.24%.
The valuation pillar appears increasingly attractive. Trading at a P/E of 19.76x and P/BV of 3.23x, both below peer averages, Wipro offers value-conscious investors an entry point into a quality franchise at reasonable multiples. The "ATTRACTIVE" valuation grade, combined with the stock's recent transition from "Very Attractive" territory, suggests the market has adequately discounted near-term growth concerns.
The dividend yield of 4.33% provides a tangible return whilst investors await growth acceleration. With a dividend payout ratio of 47.83%, the company maintains a sustainable distribution policy that balances shareholder returns with reinvestment needs. For income-focused investors, this yield compares favourably to fixed income alternatives and provides downside protection during market volatility.
However, the investment case faces headwinds from two critical factors: a "FLAT" financial trend and "MILDLY BEARISH" technical trend. The flat financial trend designation indicates that the company has not demonstrated convincing growth momentum in recent quarters, with revenue and profit growth remaining anaemic. The bearish technical trend, combined with the stock's position below key moving averages, suggests that market sentiment remains cautious.
Key Strengths & Risk Factors
KEY STRENGTHS ✓
- Fortress Balance Sheet: Net cash position of ₹37,163 crores with zero debt provides financial flexibility for strategic investments and enhanced shareholder returns
- Strong Capital Efficiency: ROE of 15.95% and ROCE of 31.24% demonstrate effective capital deployment and operational excellence
- Attractive Valuation: P/E of 19.76x and P/BV of 3.23x trade below peer averages, offering value proposition for patient investors
- Compelling Dividend Yield: 4.33% yield, highest amongst major IT peers, provides income cushion and downside protection
- Consistent Quality: "GOOD" quality grade maintained for 34 consecutive quarters reflects operational stability and financial discipline
- Zero Promoter Pledging: Absence of encumbered shares eliminates risk of distressed selling and demonstrates promoter confidence
- Sector Outperformance: Stock decline of 4.65% over one year significantly outperforms IT sector's 19.06% decline
KEY CONCERNS ⚠
- Anaemic Growth: Revenue growth of just 1.77% YoY reflects demand challenges and competitive pressures in core markets
- Sequential Profit Decline: Q2 FY26 net profit fell 2.84% QoQ despite revenue growth, indicating margin pressures
- Persistent Underperformance: Negative alpha across virtually all timeframes versus Sensex, with YTD decline of 15.98%
- Flat Financial Trend: Lack of growth momentum raises concerns about management's ability to accelerate revenue expansion
- Weak Technical Position: Stock in mildly bearish trend, trading below key moving averages with multiple overhead resistance levels
- Lower ROE vs Peers: 15.95% ROE trails sector leaders like Infosys (28.72%) and LTI Mindtree (20.26%)
- High Volatility: One-year volatility of 25.93% versus Sensex's 12.51% creates elevated risk without commensurate returns
Outlook: What to Watch
POSITIVE CATALYSTS
- Deal Momentum: Acceleration in large deal wins, particularly in digital transformation and cloud migration projects
- Margin Expansion: Sustained improvement in operating margins through operational efficiencies and favourable business mix
- Client Budget Recovery: Normalisation of IT spending as global economic uncertainty subsides
- Strategic Acquisitions: Deployment of strong balance sheet for accretive acquisitions that enhance capabilities or market access
- Technical Breakout: Decisive move above 200-day moving average (₹265.26) would signal potential trend reversal
RED FLAGS
- Further Revenue Deceleration: Sequential revenue decline or continued single-digit growth would intensify concerns
- Margin Compression: Operating margins falling below 19% would signal intensifying competitive or cost pressures
- Market Share Loss: Underperformance versus peers in revenue growth indicating competitive positioning erosion
- Attrition Increase: Rising employee turnover requiring higher wage costs and impacting project delivery
- Technical Breakdown: Breach of 52-week low at ₹225.05 would suggest further downside potential
The near-term outlook for Wipro hinges on the company's ability to demonstrate growth acceleration whilst maintaining operational efficiency. Management's commentary on client engagement levels, deal pipeline quality, and demand trends across key verticals will provide crucial insights into whether the current growth slowdown represents a temporary pause or a more structural challenge.
Investors should monitor quarterly revenue growth trajectories closely, particularly sequential momentum that would indicate improving demand conditions. Operating margin trends will reveal whether the company can balance growth investments with profitability maintenance. Any significant movements in institutional shareholding patterns, particularly amongst FIIs and mutual funds, may signal changing sentiment towards the stock.
The Verdict: Hold for Existing Investors, Wait for Fresh Entry
Score: 50/100
For Fresh Investors: Wipro presents a quality franchise at reasonable valuations, but the lack of growth momentum and weak technical positioning argue for patience. The stock offers better risk-reward for investors who wait for clearer signs of revenue acceleration or a more compelling technical setup. The attractive dividend yield of 4.33% provides some compensation for waiting, but growth-oriented investors should consider alternatives with stronger momentum.
For Existing Holders: Continue holding. The company's strong balance sheet, consistent profitability, and attractive dividend yield provide downside protection whilst you await growth inflection. The current valuation of 19.76x P/E appears fair given the growth profile, and the stock's outperformance versus the broader IT sector suggests relative resilience. Use any significant weakness towards ₹240-245 levels to average down positions.
Fair Value Estimate: ₹270-280 (6-10% upside from current levels), contingent on demonstration of sustained revenue growth acceleration and margin stability in coming quarters.
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
