Wipro poised to lag peers in FY27. Can timely deal conversions turn the tables?
Wipro Ltd’s September-quarter (Q2FY27) performance and Q3FY27 guidance indicate that the tier-1 IT company’s underperformance versus peers is likely to continue in FY27, constraining its turnaround. Wipro’s IT services revenue was flat sequentially, with constant-currency (CC) growth of 0.0%, better than consensus expectations that had been lowered to a 0.7% decline.
Growth was led by the consumer vertical, while healthcare remained a pain point. The healthcare vertical continues to face pressure from US policy changes and lower discretionary spending, although some seasonal recovery is likely in Q3. Wipro has guided for weak sequential CC revenue growth of -1.5% to +0.5% in Q3, factoring in furloughs and fewer working days, as it did last year.
Deal conversion
Faster conversion of deal wins could help Wipro, but only if contracts are closed on time. The total contract value (TCV) of deal wins in Q2FY27 fell 22.9% sequentially to $2.6 billion, the lowest in Wipro’s history, according to PL Capital.
Large-deal bookings dropped 58.6% to $674 million. Wipro signed nine large deals, including an AI-led transformation engagement with a global financial institution. For context, Q1FY27 saw $3.37 billion in total bookings, including $1.63 billion in large deals. Management attributed part of the decline to two contracts that could not be signed on time and slipped into the December quarter, adding that the pipeline remained very robust.
But not everyone is convinced by this explanation. “Management flagged two deals slipping to Q3 on paperwork delays with no loss of the deals, but the Q1 commentary had made the same slippage argument and that conversion has not materialised,” said Nirmal Bang Institutional Equities. The brokerage noted that Wipro’s large-deal wins were the weakest in at least two years. With TCV-to-revenue conversion already the weakest among peers, the shrinking order book removes one leg of the growth argument that was still standing.
Growth gap
A strong deal pipeline alone is not enough. Conversion will determine revenue visibility in Q4. Motilal Oswal Financial Services expects Wipro to lag peers and deliver slightly negative growth in FY27, compared with its earlier estimate of flattish growth. In Q2, competitors Tata Consultancy Services, HCL Technologies and Tech Mahindra reported sequential CC revenue growth of 0.5%, 2.3% and 2.4%, respectively.
Wipro’s earnings before interest and tax (Ebit) margin expanded 50 basis points (bps) sequentially to 16.5%, 30 bps above consensus estimates, although it was down 20 bps year-on-year. Margins benefited from operational efficiencies and rupee depreciation, partly offset by continued investments. Wipro targets a margin band of 17-17.5%, but has not specified a timeline. Continued investment in AI platforms and talent could weigh on the near-term margin trajectory.
Meanwhile, the anti-AI narrative is likely fuelling optimism in Indian IT stocks, even as tier-1 IT companies delivered no major positive surprises in their Q2 earnings. Prittesh Thakkar, an analyst at Prabhudas Lilladher Pvt., said that with global AI build-out capex expected to reach $1 trillion by CY26, and YTD at around $600-$700 billion, investors are now questioning the payback period. “Sentiment is shifting towards traditional IT firms, as they are diversified and are heavily accommodating AI strategies and capabilities", he added.
On Friday, Wipro’s stock rallied 5%, although it remains down 32% so far in 2026, a steeper decline than the Nifty IT index’s 18%.
Revenue visibility remains elusive, with cash generation and margin improvement offering limited support. Wipro trades at a FY28 price-to-earnings multiple of 13, at a discount to tier-1 peers, according to Bloomberg data. This valuation gap is likely to persist for now.