Wipro's revenue likely to grow by 4.5% in FY26, says Fitch; stock down 2% amid sell-off in market

The agency retained Wipro's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'A-' with a stable outlook.

"Fitch forecasts Wipro's revenue to increase by around 4.5% in FY26 compared with a slight decline in FY25. We believe that the growth will be supported by a recovery in discretionary customer IT spending, particularly in the US, where customers will benefit from declining interest rates,", it said.

Shares of the company in the opening deals were trading nearly 2% lower at ₹278.45 apiece on the NSE on Tuesday, March 4.

"We expect customers in Europe to remain under pressure in a weaker economic environment and to focus on cost optimisation and efficiency improvement. There are early signs of revenue recovery in 3Q FY25, with IT services revenue rising by 0.6% year-on-year," the agency said in a statement.

The long-term growth prospects for the IT services industry are expected to be favourable, driven by customer spending on digital transformation, cloud computing, and generative AI (GenAI), Fitch said, adding that revenue share from GenAI may rise as customers solve problems relating to digital infrastructure, legal issues, and cybersecurity concerns.

To integrate AI across its operations, Wipro is ensuring that its workforce is equipped to leverage AI effectively, with about 50,000 out of its 2,37,732 employees having advanced certifications in AI.

Further, the rating agency said the Bengaluru-based firm's EBITDA margin will improve by around 20% in FY25 and FY26.

Wipro has maintained the same credit rating since 2021. A positive rating action or upgrade is unlikely in the medium term, Fitch said, except if the company profile significantly improves—for example, increased market share and expansion in pre-dividend FCF (free cash flow) while maintaining EBITDA leverage below 1.3 times.

Wipro Q3 FY25 Results

For the December quarter of the fiscal year 2025 (Q3 FY25), the IT major saw its revenue from operations rise a marginal 0.5% to about ₹22,319 crore, aided by momentum in the banking, financial services, and insurance space as well as the Americas geography.

The company topped street expectations with a 24.4% year-on-year (YoY) rise in consolidated net profit for the quarter under review at ₹3,354 crore. India's fourth-largest IT services company guided for a "more hopeful and resilient" 2025.

Wipro CEO and Managing Director Srinivas Pallia said clients are cautiously optimistic and added that discretionary spending is slowly returning.

Wipro, which competes with larger rivals such as TCS and Infosys in the IT services market, reported better-than-expected net profit numbers for Q3 FY25 but called out the softness in Asia Pacific, Middle East, and Africa (APMEA) and Europe regions.

For the March quarter, Wipro sees revenue from the IT services business in the range of $2,602 million to $2,655 million, which sequentially translates into a band of 1% decline to 1% growth.

Wipro share price trend

Shares of the company have risen over 7% in the past 12 months.