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Wipro’s (WPRO IN) Q4 revenue numbers were closer to the lower end of the guidance, while it was able to maintain margins due to continued efforts on cost optimisation. The company is guiding for a sequential revenue decline of 3.5% to 1.5% in Q1FY26. TCV numbers were strong for Q4 but were lower in FY25 versus FY24. We continue to recommend SELL on the stock given: i) weak Q1 guidance, ii) FY26 likely to be the third consecutive year of revenue decline, iii) no material margin improvement levers ahead and iv) ~36% of the exposure to industries, which will have a direct bearing on tariff-related impact.– Recommend Sell with a revised TP of INR 210 (earlier INR 250).

America 1 reported growth; other markets soft: In Q4, revenue declined closer to the lower end of the guided range. The management had guided for a revenue growth of -1% to +1% in CC in Q4 but WPRO reported a 0.8% revenue drop in CC terms. In USD terms, revenue declined 1.2% QoQ but in INR terms, it grew 0.7%, helped by rupee depreciation. Growth in Q4 was visible only in America 1 market, which was led by the CAPCO business. The EU and AMEA markets were weak. Sector-wise, only Energy, Manufacturing and Resources reported a growth of 0.6% QoQ in CC terms, while other verticals reported a sequential decline. Total contract value (TCV) came in strong at ~USD 4bn, up 12.5% QoQ, led by 17 large deals, including two mega deal wins. LTM attrition was down 30bps QoQ to 15.0% and headcount rose by 0.6K in Q4.

Margins flat sequentially: EBIT margin was flat QoQ at 17.5%, despite weak revenues due to cost control. Employee expenses have been largely flat for the quarter while subcon cost have seen some moderation in Q4. We believe that this is a reflection of the continued focus on offshoring since the offshoring revenue mix is now at 62% versus <60% a few quarters back. A sequential drop in LTM attrition also could have helped. WPRO maintained that margin may remain range-bound in the near term. We believe that revenue growth could have been the major margin lever, which will be missing in FY26 for WPRO and hence, we are not seeing any material improvement in margin, in fact we have built up moderation in margins in FY26/FY27.

We recommend Sell; TP pared to INR 210: Q1FY26 guidance continues to be weak (-3.5% to - 1.5% in CC). The guidance has factored in uncertainty related to tariff related announcement, as a result of which clients are taking cautionary approach to tech spending in the near term. Markets such as Europe (despite new management in place since the past few quarters) as well as EMEA continue to report weak numbers. The stock has seen a downturn in the past six months as expectations that built up on growth after the new CEO joined are yet to materialise. We recommend Sell with a pared TP of INR 210 from INR 250 (as we are expecting a revenue decline in FY26 and some recovery thereafter). We cut our target multiple to 17x FY27EPS from 18x earlier to reflect weak FY26. Key upside risks are betterthan-expected revenue growth and sustained margin expansion.

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