Wipro Q4 Earnings: Conflicting Projections Amid Cost Pressures

Wipro's upcoming fourth-quarter earnings announcement on April 16th is expected to reveal a significant split in analyst views. This reflects the challenging market conditions for Indian IT services. While the headline numbers will grab attention, analysts have differing expectations for profitability and the strength of its core business growth. These factors are playing out against a backdrop of AI disruption across the sector and currency benefits.

Conflicting Profit Projections

Forecasts for Wipro's Q4 net profit show a striking divergence. Nuvama expects a year-on-year profit decline of over 9% to about ₹3,239 crore, down 6% from the previous quarter. This outlook is based on expectations of shrinking margins by 30 basis points quarter-on-quarter. Nuvama attributes this to expenses from the Harman acquisition and recent wage increases, though currency gains could offer some relief. In contrast, Kotak Institutional Equities forecasts a higher adjusted net profit of over ₹3,667 crore, a nearly 3% rise year-on-year. Kotak anticipates stable margins, believing rupee depreciation will offset wage and integration costs.

Revenue: Acquisitions vs. Core Growth

Revenue forecasts are significantly shaped by strategic acquisitions, particularly the Harman digital transformation business. Nuvama estimates Q4 revenue at ₹24,397 crore, up 4% sequentially, with about 1.5% from the Harman deal. Kotak projects total revenues closer to ₹24,741 crore, a 10% year-on-year increase. However, Kotak's analysis points to an organic revenue decline of 0.7%. This highlights that reported growth is mainly driven by acquisitions, suggesting Wipro may be relying on these deals to counter a slowdown in its core business.

EBIT and Margin Outlook

Forecasts for Earnings Before Interest and Taxes (EBIT) also differ. Nuvama expects EBIT around ₹3,959 crore, a modest 1% year-on-year rise, with margins shrinking. Kotak, on the other hand, predicts EBIT at ₹4,258 crore, a substantial 9% year-on-year increase, with stable margins. Kotak believes currency movements will help offset wage pressures. Wipro's success in managing these costs while integrating acquisitions will be key to its margin performance.

Valuation Compared to Peers

Wipro's stock trading on April 7, 2026, showed a Price-to-Earnings (P/E) ratio of approximately 15.60x. This valuation appears favorable when compared to its larger Indian IT peers like TCS (around 17.8x), Infosys (about 18.5x), and HCL Technologies (higher at 23.1x). This suggests investors might see Wipro as having lower growth prospects or higher risk. On the same date, April 7, 2026, the Nifty IT index rose 2%, with Wipro's stock climbing over 3%. This jump was partly driven by news of an 8-year, $1 billion deal with Olam Group, including $800 million for AI transformation services. This stock movement went against the broader market trend, where the Sensex traded flat or slightly down. Overall, the Indian IT sector has faced major challenges, with the Nifty IT index down about 25% year-to-date due to fears about AI disruption and economic uncertainty.

Past Investor Reactions to Q4 Results

Wipro's stock has often reacted negatively to past Q4 earnings, even when profits grew. For instance, following Q4 FY25 results reported in March 2026, the stock fell 6% despite profit increases, driven by weak future guidance and sector issues. In April 2025, Wipro shares similarly dropped over 6% after Q4 FY25 results, as revenue growth was limited and the IT services segment declined. Earlier, Wipro's Q4 FY24 results in April 2024 showed profit and revenue declines, accompanied by a significant leadership change with Srinivas Pallia becoming CEO. These past reactions show investors focus on future outlook and segment performance more than current profit figures.

Reasons for Caution

Despite recent stock gains and the large Olam deal, several factors suggest caution. New CEO Srinivas Pallia faces the task of managing a sector rapidly changing due to AI. While Wipro's lower P/E ratio may suggest market skepticism, a key concern is the company's reliance on acquisitions like Harman, which could be hiding a drop in core revenue. The wider IT industry is also dealing with AI's potential to disrupt traditional services, leading to lower revenues in areas like coding, testing, and maintenance. Wipro's voluntary attrition rate rose to 14.2% in Q4 FY24, signaling possible hiring and retention difficulties. Analyst views are mixed, with ratings from 'Sell' to 'Buy', reflecting an uncertain outlook. Wipro's success in implementing its AI strategy and keeping margins stable amid these challenges will be critical.

Analyst Views and What to Watch Next

Analyst price targets for Wipro vary, with the consensus target around ₹203.51. This suggests limited stock growth potential if forecasts are met. Investors will closely watch the company's guidance for the first quarter of fiscal year 2027, seeking signs of faster AI service growth or stable core revenue. Commentary on margin improvement under CEO Pallia and the Harman integration's impact will be key points to watch. If results differ from brokerages' expectations, especially regarding organic revenue or margin stability, it could cause significant stock price shifts.