Hold Wipro; target of Rs 166: Prabhudas Lilladher

Prabhudas Lilladher's research report on Wipro WPRO reported flattish IT Services revenue growth in Q2FY27, ahead of our estimate of -0.5% QoQ CC, while EBIT margin expanded 50 bps QoQ to 16.5%, marginally above our estimate of 16.4%. Growth was led by Consumer (+2.6% QoQ CC) and BFSI (+1.0%), offset by continued weakness in Healthcare (-3.8%) and Tech & Comms (-2.6%). Margin expansion was aided by operational improvements and rupee depreciation, despite continued investments in the business. Bookings declined sharply, with total TCV down 22.9% QoQ CC to USD 2.6bn (lowest in history) and large-deal TCV declined 58.6% to USD 0.7bn. Management clarified that two deals closure were delayed and are expected to close in Q3, potentially supporting revenue upside in Q4FY27. It remains optimistic about Q3 deal closures, citing a robust pipeline. However, Q3 revenue guidance of -1.5% to +0.5% QoQ CC remains muted, partly due to seasonal furloughs. While management sees AI-led transformation, legacy modernisation and agentic AI as growth opportunities, the weakness in discretionary areas continue to weigh on traditional IT spending. Following the better-than-expected Q2 performance, we marginally improve our FY27E IT Services revenue est. to -0.4% YoY CC (from -0.7% YoY CC earlier), while keeping our FY28E/FY29E growth estimates unchanged at 0.4%/0.9% CC. Outlook We maintain our EBIT margin estimates at 16.5%/16.7%/16.8% for FY27E/FY28E/FY29E, respectively. We assign a PE of 11x to Sep. 28E EPS to arrive a TP of INR 166 (earlier INR 154) and maintain our HOLD rating. For all recommendations report, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Wipro - 1610026 - prabhu