ICICI Securities has lowered its price target for Wipro to ₹153, citing weak growth guidance and slowing deal momentum. The brokerage highlighted concerns over the company's margin pressure and persistent lag in revenue growth compared to its large-cap IT industry peers.
ICICI Securities has issued a cautious outlook on Wipro, revising its price target for the company's shares to ₹153. This adjustment follows a period of persistent revenue challenges for the IT major. In its latest report, the brokerage reiterated a 'Reduce' rating, driven by management's soft organic revenue guidance of -1.5% to +0.5% for the second quarter of the 2027 fiscal year. This forecast suggests a potential decline in core business performance, which the company attributes to broad macroeconomic uncertainty and ongoing geopolitical instability affecting client spending.
Impact of Declining Deal Bookings
A notable concern for investors is the slowdown in new business. Deal bookings have decreased on a year-on-year basis, with management noting that several deal closures have been pushed into the coming quarter. Because deal bookings are a key indicator of future revenue, this delay suggests that the company may face continued difficulty in accelerating its top-line growth in the near term.
Profit Margins and Higher Costs
Wipro’s profitability also faced pressure, with IT services margins contracting by 100 basis points quarter-on-quarter to 16.0%. This dip in profitability is primarily due to a combination of higher employee costs resulting from annual salary hikes and the upfront expenses associated with ramping up large, recently secured contracts. Additionally, the company is continuing to spend heavily on artificial intelligence investments. While these initiatives are aimed at future competitiveness, they are currently acting as a drag on short-term profit margins.
Execution and Peer Comparison
The brokerage report highlights that Wipro’s revenue growth continues to lag behind its large-cap IT peers, leading to concerns regarding execution efficiency. In response to these persistent growth and margin headwinds, ICICI Securities has reduced its earnings per share estimates for the 2027 and 2028 fiscal years by approximately 2.5%.
For investors, the key monitorable remains whether Wipro can improve its execution speed and stabilize its deal conversion rate. The company's future performance will depend on its ability to manage these cost pressures while navigating a challenging demand environment for IT services. The valuation set by the brokerage is based on a multiple of 11 times the estimated fiscal year 2028 earnings per share of ₹14.