Wipro Ltd. Shares Plunge Over 33% From Peak Amidst Weak Financials and Market Underperformance

Performance Overview: A Steep Decline Against Market Gains

Over the past year, Wipro Ltd. has delivered a disappointing return of -32.38%, while the Sensex has advanced by 9.81%. This underperformance extends across multiple time frames: the stock is down 8.14% over the last week compared to a marginal 0.97% decline in the Sensex, and it has lost 21.03% in the past month against a near-flat market. Year-to-date, Wipro’s decline of 19.87% dwarfs the Sensex’s modest 2.11% fall. Even over longer horizons, the stock lags significantly, with a three-year return of just 3.91% versus the Sensex’s 36.75%, and a five-year return of -2.52% compared to the benchmark’s 62.53%.

Correction Triggers: Earnings and Operational Challenges

The sharp correction is underpinned by a series of disappointing financial metrics and operational indicators. Wipro’s operating profit has grown at a modest annual rate of 5.44% over the last five years, a pace that investors find uninspiring given the company’s large-cap status and sector growth potential. The latest quarterly results reveal further concerns: operating profit to net sales ratio has dropped to a low of 18.24%, signalling margin pressures. Profit before tax (PBT) excluding other income declined by 9.29% to ₹3,128.60 crores, reflecting challenges in core profitability.

Additionally, the company’s debtors turnover ratio for the half-year stands at a low 7.56 times, indicating slower collections and potential working capital inefficiencies. These factors collectively have weighed heavily on investor sentiment, prompting a downgrade in the company’s Mojo Grade from Hold to Sell on 17 February 2026, with a current Mojo Score of 47.0.

Valuation and Market Capitalisation Context

Wipro’s current market capitalisation stands at ₹2,21,343.57 crores, categorising it as a large-cap stock. The company trades at a price-to-earnings (P/E) ratio of 17.06, which is below the industry average of 24.06, suggesting a relatively attractive valuation on a P/E basis. Furthermore, the price-to-book value ratio is 2.6, indicating a fair valuation compared to historical peer averages.

Despite the valuation appeal, the company’s long-term growth prospects remain under scrutiny. The operating profit growth rate of 5.44% annually over five years is considered subpar for a technology and consulting firm expected to capitalise on digital transformation trends. The PEG ratio of 2.5 further implies that the stock’s price may not be fully justified by its earnings growth potential.

Financial Strength and Dividend Appeal

On the positive side, Wipro maintains a robust balance sheet with an average debt-to-equity ratio of zero, reflecting a debt-free status that reduces financial risk. The company also demonstrates high management efficiency, with a return on equity (ROE) of 16.48%, signalling effective utilisation of shareholder capital.

Investors seeking income may find Wipro’s dividend yield of 5.1% attractive, especially in a low-interest-rate environment. This yield provides some cushion against the stock’s price volatility and may appeal to dividend-focused portfolios.

Sector and Peer Comparison

Within the Computers - Software & Consulting sector, Wipro’s performance has lagged behind peers and the broader market. The Sensex’s 10-year return of 252.73% far outpaces Wipro’s 108.04%, underscoring the company’s relative underperformance. This gap highlights the challenges Wipro faces in maintaining growth momentum and market share in a competitive industry.

Moreover, the downgrade to a Sell rating by MarketsMOJO reflects a cautious stance on the stock’s near-term prospects. The company’s Mojo Grade dropped from Hold to Sell on 17 February 2026, signalling deteriorating fundamentals and investor confidence.

Potential Bottom Signals and Outlook

While the recent price action has been negative, some indicators suggest that Wipro may be approaching a valuation floor. The stock’s P/E ratio below the industry average and a high dividend yield provide a degree of support. Additionally, the company’s zero debt and strong ROE indicate financial resilience, which could help it weather near-term headwinds.

However, investors should remain cautious given the weak earnings growth, margin pressures, and deteriorating profitability metrics. The stock’s underperformance relative to the Sensex and sector peers over multiple time frames signals structural challenges that may take time to resolve.

Market participants will be closely watching upcoming quarterly results and management commentary for signs of operational improvement or strategic initiatives that could reinvigorate growth. Until then, the stock’s Sell rating and negative momentum suggest limited upside potential in the near term.

Conclusion

Wipro Ltd.’s sharp correction of over 33% from peak levels reflects a confluence of disappointing financial results, valuation concerns, and broader market dynamics. Despite some strengths such as a strong balance sheet and attractive dividend yield, the company’s sluggish growth and margin contraction have weighed heavily on investor sentiment. The downgrade to a Sell rating underscores the cautious outlook. While potential bottoming signs exist, investors should carefully weigh the risks and monitor forthcoming developments before considering re-entry.

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