Analysts warn of a third year of revenue decline, stock downgraded as Wipro slides on weak Q1 forecast

Core Viewpoint - Wipro Ltd's shares fell by as much as 6.3% following a disappointing revenue forecast for the June quarter, indicating concerns over a potential third consecutive year of revenue decline due to ongoing global tech spending cuts [1][2]. Group 1: Revenue Forecast and Market Reaction - Wipro expects revenue for the April-June period to decline between 1.5% and 3.5% sequentially, with the new CEO Srini Pallia highlighting increased uncertainties for the upcoming fiscal year [1][2]. - The company's shares have seen a year-to-date decline of 22.4%, which is slightly better than the broader Nifty IT index's 24.8% fall, reflecting growing investor skepticism about Wipro's future prospects [2][3]. Group 2: Analyst Reactions and Earnings Estimates - Analysts have expressed concerns that Wipro's first-quarter guidance could hinder any recovery efforts, with Phillip Capital noting it sets the stage for another challenging year following two years of revenue decline [4]. - Several brokerages, including Nomura and Nuvama, have reduced their FY26 and FY27 earnings estimates due to macroeconomic uncertainties and slowing project spends, with Nomura cutting its FY26 EPS estimates by 2-4% and revising the target price to ₹280 from ₹300 [5][6]. Group 3: Downgrades and Market Sentiment - At least nine out of 39 analysts covering Wipro have downgraded their ratings, and 20 have cut their price targets, with the median target price declining by nearly 14% to ₹250 over the past month [7]. - Emkay Global maintained a "Reduce" rating with a target of ₹260, citing low near-term visibility despite a strong deal pipeline [8]. Group 4: Performance Analysis - ICICI Securities described the March quarter's performance as "abysmal," pointing to weak revenues and macro concerns, particularly in discretionary sectors like auto and manufacturing [9]. - Motilal Oswal Financial Services (MOFSL) cut its FY26/FY27 EPS estimates by around 4%, anticipating a 1.9% year-over-year revenue decline in constant currency terms, while retaining a Sell rating with a target price of ₹215 [10]. Group 5: Positive Aspects and Future Outlook - Some brokerages noted improvements in capital allocation policies and a projected FY27 dividend yield of 4%, but the consensus remains that the near-term outlook is grim with little to trigger a re-rating of the stock [11].