Brokerages Weigh In Mixed Outlook for Wipro's $375-mn Harman Deal

IT services major Wipro announced a $375 million acquisition of Harman Connected Services, a company with a strong focus on engineering research and development (ER&D).

Brokerages see the move as an important step for Wipro as it doubles down on its digital engineering and AI-led offerings. Nomura, which has a ‘buy’ call on the stock with a target price of ₹310, said the deal would significantly bolster Wipro’s design-to-manufacturing capabilities. By its estimates, the acquisition could lift Wipro’s revenues by 280 basis points in FY27.

The transaction values Harman Connected Services at 1.19 times its CY24 sales of $314.5 million. The firm employs around 5,600 people, largely India-based, with a revenue per employee of $56,000. Its clientele includes marquee names such as Samsung, while its operations will expand Wipro’s reach into newer markets, including South Korea.

However, the acquisition also comes with a cost. The management has guided for a 50-basis-point hit to Ebit margins in FY27 on account of integration costs, amortisation, and the acquired business’s relatively lower profitability.

Morgan Stanley, which has an ‘equalweight’ stance on the stock with a price target of ₹285, stated that while the deal could increase Wipro’s ER&D revenue by 10%, it is likely to be margin-dilutive and only neutral to slightly dilutive to earnings per share in FY27.

Meanwhile, HSBC kept a more cautious tone, with a ‘hold’ rating and a target of ₹260. However, it did acknowledge that Wipro’s valuation discount to peers was inching closer to historical extremes. The brokerage also shared expectations of the recent client-specific issues in Europe and leadership transitions to be behind the company, with management expressing confidence in a growth recovery from the second half of FY26.