Wipro Shares Fall 6% as Tariff Uncertainties Cast Shadow on Growth Outlook

Shares of information technology major Wipro slumped 6% in early deals on April 17 after the company’s subdued March quarter earnings, and management’s cautious outlook spooked investors. Wipro’s revenue for the reporting quarter slid 0.8% sequentially in constant currency terms, slightly below the market expectations.

But more than a soft FY25-exit, disappointing outlook for the coming quarters made investors nervous. Investors moved quickly to reassess their positions after the company’s management guided for a 3.5-1.5% sequential fall in revenue for the June quarter of FY26 in constant currency terms. Clients are expected to remain cautious amid macroeconomic uncertainties, despite strong underlying demand for technological modernisation, Srini Pallia, the company’s chief executive officer said.

Wipro shares retreated before the market opened in India as the company’s ADR closed 3% lower on the New York Stock Exchange following the soft quarterly results that it released post market hours Wednesday, signalling potential weakness ahead.

Uncertainties around tariff are the reason for muted client spending, the management said in the post-earnings conference call. Large transformation projects are either paused or have had their timelines realigned.  Some clients are also re-evaluating their IT budgets, the company said.

Clients in the manufacturing and consumer business are likely to get directly affected by the tariffs. The company’s manufacturing vertical grew 1.1% on a sequential basis in the reporting quarter, whereas its consumer vertical fell 1.3% sequentially in constant currency terms. While the 90-days tariff pause is showing some signs of positive momentum, it is too early to take this as positive broad-based growth lever, the company added.

Besides revenue headwinds, the company might also face margin pressures in the ongoing quarter due to overall weak revenue environment and pricing pressure in cost-takeout and vendor consolidation deals. Wipro, however, aims to maintain margins within a narrow band going forward.

On the other hand, for the March quarter, the company managed to deliver on its operational targets as EBIT margins were flat sequentially. But 17.5% margin seems to be at the upper end of the range and further gains could be limited, Motilal Oswal said in its research report. “Further, the impending mega deal ramp-ups and soft revenues could put pressure on margins in the short term,” the brokerage firm said.

Brokerages Turn Wary

Bogged down by the headwinds in the ongoing quarter, the IT major also faced a slew of downgrades and target price cuts from brokerages. Motilal Oswal has cut its target price on the company by 13% to Rs 215, maintaining its ‘sell’ rating on the stock.

Nuvama, on the other hand, has downgraded the IT stock to ‘hold’ from ‘buy’ and cut the target price by 13% to Rs 260. It had upgraded Wipro few months ago on the back of an expectation of revival in discretionary spend and relatively inexpensive valuations, but now it does not see either of the two reasons holding up any longer, Nuvama said in a report.

Global brokerage house Nomura also followed the cue and trimmed its earnings estimate for the IT major by 2-4% for FY26 and FY27 due to weaker revenue and margin outlook. Its earnings estimate is 8-9% lower than Bloomberg consensus, Nomura said.