Wipro shares jump over 6% after Q2 results; is rally sustainable? Here's what Jefferies, Motilal Oswal said

Wipro shares jumped over 6 per cent on Friday after the IT services company reported its September quarter results for the financial year 2026-27.

However, brokerages remained cautious about the company's growth outlook, citing weak deal bookings, an uncertain demand environment and expectations of another subdued quarter.

Wipro reported a 1.4 per cent decline in consolidated net profit attributable to owners to Rs 3,200.6 crore in the July-September quarter of FY27, compared with Rs 3,246.2 crore in the corresponding period last year.

Revenue from operations rose 9.1 per cent to Rs 24,752.7 crore from Rs 22,697.3 crore in the year-ago quarter. Sequentially, net profit declined 4.5 per cent, while revenue increased 1 per cent.

Revenue from the IT services business stood at USD 2,611.5 million, remaining unchanged sequentially and increasing 0.3 per cent year-on-year.

Wipro's other income declined to Rs 755.5 crore during the quarter from Rs 947.7 crore a year ago and Rs 979 crore in the April-June quarter. The company attributed the fall in other income to the completion of its share buyback in June.

For the October-December quarter, Wipro expects IT services revenue to be between USD 2,571 million and USD 2,625 million. This translates into a sequential change of minus 1.5 per cent to plus 0.5 per cent in constant currency terms.

Wipro CEO and Managing Director Srini Pallia said the third quarter would continue to be affected by seasonal furloughs.

Jefferies maintained its underperform rating on Wipro but raised its target price to Rs 155 from Rs 150. At the current market price of Rs 184.99, the brokerage's target implies a downside of around 16.2 per cent.

The brokerage said Wipro's growth outlook remained weak, pointing to a 45 per cent year-on-year decline in deal wins.

Jefferies expects earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 4.5 per cent over FY27-FY29. It said the expected earnings growth, along with a dividend yield of 5 per cent, made the stock's risk-reward profile unattractive.

The brokerage's assessment indicates that the recent share price rally has not changed its concerns about the company's growth prospects.

Motilal Oswal maintained its neutral rating on Wipro with a target price of Rs 170. At the current market price of Rs 184.99, the target implies a downside of around 8.1 per cent.

The brokerage said a recovery in the company's performance remained distant and that the third-quarter revenue guidance pointed to another weak quarter. It added that the conversion of deals into revenue would be important for improving growth visibility in the fourth quarter.

Motilal Oswal noted that Wipro's IT services revenue was flat sequentially in constant currency terms in Q2 FY27, ahead of its estimate of a 0.5 per cent decline.

However, total contract value (TCV) of deals declined 22.9 per cent sequentially to USD 2.6 billion. The total contract value of large deals fell 58.6 per cent to around USD 674 million.

The brokerage said management attributed the decline in deal bookings to delays in completing paperwork for two deals, with signing expected in the third quarter. It added that successful conversion of these deals would be important for improving revenue visibility in Q4.

Motilal Oswal expects Wipro to lag its peers in FY27 and has projected slightly negative revenue growth in constant currency terms for the full financial year. It has valued the company at 11 times its estimated FY28 earnings per share.

Wipro's revenue guidance for the December quarter suggests that the company may continue to face growth challenges. The company expects IT services revenue of USD 2,571 million to USD 2,625 million, indicating sequential constant currency growth of minus 1.5 per cent to plus 0.5 per cent.

Motilal Oswal has factored in a 0.5 per cent sequential decline in constant currency revenue, based on the midpoint of the company's guidance range.

The brokerage said the overall demand environment remained largely unchanged, with clients balancing efficiency and productivity initiatives against faster adoption of artificial intelligence (AI).

Among business segments, consumer and banking, financial services and insurance (BFSI) grew 2.6 per cent and 1 per cent, respectively, on a sequential constant currency basis. Energy revenue increased 1.1 per cent.

However, technology and communications revenue declined 2.6 per cent, while healthcare revenue fell 3.8 per cent sequentially in constant currency terms.

Wipro's adjusted earnings before interest and tax (EBIT) margin increased 50 basis points sequentially to 16.5 per cent, in line with Motilal Oswal's estimate of 16.4 per cent. The brokerage expects margin improvement to remain gradual because of continued investments in AI capabilities.

Wipro shares were trading at Rs 184.99, up Rs 10.94, or 6.29 per cent, on the NSE at 10:38 am on October 16.

Despite the latest rise, the stock has declined 27.05 per cent over the past year and 30.74 per cent so far in 2026. It touched a 52-week high of Rs 273.10 on December 22, 2025, and a 52-week low of Rs 156.79 on September 29, 2026. The company had a market capitalisation of Rs 1,83,199.32 crore.