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WPRO outlook shows signs of improvement, reflected in its Q2FY26E revenue guidance of -0.5% to 1.5% . We believe the new leadership should be in position to facilitate better execution, with large deals seeing rampups and pipeline being robust. BFSI vertical should see strong deal ramp-ups, going ahead. Hence, we have revised our estimate upward and expect Revenue/EBIT/PAT to expand at a CAGR of 5.3%/7.1%/5.8%, respectively, over FY25–FY28E. Thus, we upgrade Wipro to ADD rating with a revised target price of INR 285 (earlier INR 252), based on FY27E/FY28E average EPS of INR 14.3 at P/E multiple of 20x.

Resilient Q2FY26 Performance; Revenue & PAT Beat Estimate

* Q2FY26 IT services’ revenue came in at USD 2,604.3Mn, up 0.7% QoQ, (vs CIE est. at USD 2,597Mn) while in CC terms growth stood at 0.3% QoQ. Total revenue including Product revenue was up 0.8% QoQ in USD terms, while, in INR terms, the total revenue stood at INR 227Bn, up 2.5% QoQ.

* Operating (EBIT) margin of IT Services came in at 16.7% for Q2FY26, down 60 bps QoQ (vs CIE est. at USD 16.0%). However, overall EBIT margin remained flat at 16.2% QoQ led by a strong margin of Product segment.

* PAT came in at INR 32.4Bn, down 2.5% QoQ. (vs CIE est. at INR 29.8Bn).

WPRO Eyes H2FY26 Rebound with Large Deals Wins; Focus on Execution

WPRO projects Q3FY26 revenue between USD 2.5Bn and USD 2.6Bn, indicating -0.5% to +1.5% sequential growth in CC terms. The company expects a stronger H2FY26, supported by recent large deal wins and focus on execution. Q2FY26 TCV stood at USD 4.7Bn, down 5.7% QoQ, where large deals TCV stood at USD 2.9Bn up 7% QoQ, supported by two mega deals in the Healthcare and BFSI verticals. The bulk of these deals are focused on cost optimisation, vendor consolidation and AI-led legacy modernisation. Vertically, BFSI reported growth of 2.6% QoQ in CC, supported by net new wins and account expansion, with a positive demand outlook. In contrast, Manufacturing & Resources and Consumer segments witnessed softness, declining 1.7% QoQ and 1.5% QoQ, respectively, due to tariff impact and ongoing supply chain disruption. Looking ahead, we expect a gradual top-line recovery led by the contribution of Phoenix deal and ramp-up of other large contracts, which could support growth in H2FY26.

Margin Outlook Lowered amid Large-deal Investments & Ramp-ups

WPRO reported IT services EBIT margin of 16.7% in Q2FY26, impacted by a USD 13.1Mn provision related to the bankruptcy of a client. Management intends to maintain adjusted operating margin in a narrow band around 17.2%. The historical target range was 17% to 17.5%. Near-term pressure is expected to persist due to large-deal ramp-ups, ongoing investment requirements and the Harman Digital acquisition, which is likely to cause a 60 bps margin dilution. Nonetheless, WPRO is focusing on operational levers, such as productivity improvements in fixed-price projects and SG&A optimisation to partially offset these headwinds. We, thus, anticipate a conservative margin expansion to 17.3% in FY27E, reflecting disciplined execution and gradual benefit from operating efficiencies.

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