- Revenue grew 1.4% QoQ, but order intake plunged 30% – a potential red flag.
- Adjusted EBIT margin held at 16.5%, slightly above estimates, showing pricing power.
- Neutral rating with a 20x FY28E EPS multiple implies market complacency.
- Execution discipline and deal‑to‑revenue conversion will drive the next upside.
- Peers like Tata Consultancy and Infosys are seeing similar intake pressure, but differ in margin trajectories.
You missed the warning hidden in Wipro's Q3 numbers, and that could cost you.
Wipro (WPRO) posted third‑quarter FY26 IT services revenue of $2.6 billion, up a modest 1.4% quarter‑over‑quarter on a constant‑currency basis. The top line aligns with consensus forecasts, but the story beneath the headline is far more nuanced. Order intake fell sharply to $3.3 billion, a 30% QoQ contraction, while the large‑deal total contract value (TCV) slipped 6.2% year‑over‑year to $0.9 billion. Adjusted EBIT margin nudged higher to 16.5% versus the expected 16.4%, and adjusted profit after tax rose 3.6% QoQ to INR 34 billion, effectively flat on a YoY basis after stripping a one‑time labor‑code expense of INR 3,028 million.
Why Wipro's 1.4% Revenue Rise Matters in a Slowing IT Landscape
The 1.4% QoQ increase may look trivial, yet in an industry where macro‑economic headwinds are compressing spend, any positive top‑line momentum is noteworthy. Indian IT services have been grappling with subdued client budgets, geopolitical uncertainty, and a shift toward cloud‑native models. A revenue uptick signals that Wipro’s mix of legacy transformation contracts and emerging digital services is still resonating. Moreover, the constant‑currency adjustment removes the noise of rupee fluctuations, indicating genuine demand growth.
What the 30% Order Intake Decline Reveals About Future Growth
Order intake is the forward‑looking engine of the IT services business. A 30% drop suggests a slowdown in pipeline conversion, potentially foreshadowing muted revenue in the next two quarters. However, the decline is not uniform across segments. Large‑deal TCV only slipped 6.2% YoY, implying that while smaller, low‑margin deals are evaporating, marquee contracts remain relatively stable. If Wipro can convert this high‑value pipeline efficiently, the short‑term intake shock could translate into a healthier revenue trajectory later in FY27.
How Wipro's 16.5% Adjusted EBIT Margin Stacks Up Against Peers
At 16.5%, Wipro’s adjusted EBIT margin is marginally above the consensus estimate and sits comfortably within the industry’s 15‑18% band. Compare this to Tata Consultancy Services (TCS), which posted a 21% margin, and Infosys, hovering around 18%. Wipro’s ability to sustain a mid‑teens margin despite intake pressure underscores disciplined cost management and a resilient pricing strategy. The margin stability also cushions the bottom line against revenue volatility, an attractive trait for risk‑averse investors.
Sector Pulse: Indian IT Services Trends and Their Impact on Wipro
The broader Indian IT sector is navigating three macro trends:
- Digital transformation acceleration: Enterprises are reallocating spend toward cloud, AI, and cybersecurity, favoring vendors with strong IP.
- Geographic diversification: Companies are expanding footprints in the U.S. and Europe to offset slowing demand in the APAC region.
- Talent scarcity and wage inflation: Rising labor costs pressure margins, prompting firms to up‑skill existing staff and invest in automation.
Wipro’s recent investments in AI‑driven automation platforms and its “Topaz” cloud practice align with these trends, potentially offsetting the intake dip as higher‑margin digital contracts win market share.
Historical Parallel: Past Q3 Slumps and Recovery Paths
Looking back, Wipro experienced a similar 28% intake contraction in Q3 FY22. The company responded by accelerating its “Digital First” roadmap, increasing cross‑sell rates, and trimming non‑core cost centers. By FY24, revenue growth rebounded to 6% YoY, and margins improved to 17.2%. This precedent suggests that a temporary intake dip can be a catalyst for strategic realignment rather than a permanent decline.
Investor Playbook: Bull and Bear Cases for Wipro
Bull Case: If Wipro successfully converts its remaining large‑deal pipeline and leverages AI‑enabled services, revenue could accelerate to 5‑6% YoY by FY28. Margin expansion to 18% would push FY28 earnings per share (EPS) to levels that justify a 20‑times multiple, making the INR 275 target price a near‑term upside catalyst.
Bear Case: Prolonged intake weakness, especially in the mid‑tier segment, could erode revenue growth to sub‑1% and compress margins as cost‑inflation outpaces pricing power. In that scenario, the stock could trade below the current target, and the neutral rating would tilt toward a sell stance.
In summary, Wipro’s Q3 numbers paint a mixed picture: solid margin resilience against a stark intake decline. The decisive factor will be execution—specifically, the speed at which the firm turns high‑value contracts into revenue and how effectively it capitalizes on the digital transformation wave. Savvy investors should monitor intake trends, margin trajectories, and the competitive response from peers like TCS and Infosys before positioning for the next move.