Summary
Wipro Limited - Q3 FY26 Earnings Call Summary Friday, January 16, 2026 7:00 PM IST
Event Participants
Executives 5 Abhishek Jain, Aparna Iyer, Hari Shetty, Saurabh Govil, Srini Pallia
Analysts 6 Kawaljeet Saluja, Kumar Rakesh, Nitin Padmanabhan, Ravi Menon, Rishi Jhunjhunwala, Vibhor Singhal
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| IT Services Revenue | $2.64 billion | +1.4% QoQ in CC terms; +0.6% organic growth excluding HARMAN DTS acquisition. |
| Total Bookings (TCV) | $3.3 billion | Includes $871 million in large deal bookings; management noted timing of mega-deals led to QoQ “softness.” |
| Operating Margin | 17.6% | +40 bps QoQ (adjusted); +10 bps YoY, representing best performance in 7 quarters. |
| Adjusted Net Income | ₹3,360 crores | +3.5% QoQ and flat YoY; impacted by specific one-off restructuring and labor code charges. |
| Operating Cash Flow | 135% of Net Income | Remains robust; gross cash and investments reached $6.5 billion. |
| Voluntary Attrition | ~12% | Reported as “low” at 12% for the quarter; headcount increased due to HARMAN acquisition and Phoenix deal rebadging. |
| Dividend | ₹6 per share | Total cash distribution for FY26 to exceed $1.3 billion, surpassing minimum policy thresholds. |
Geographic & Segment Commentary
- Americas 1: Grew 1.8% QoQ and 2.8% YoY. Performance was driven by strength in Healthcare, Consumer, and LATAM markets.
- Europe: Grew 3.3% QoQ but declined 4.6% YoY. Sequential growth was primarily led by the ramp-up of previously announced mega-deals and traction in the UK.
- BFSI: Grew 2.6% QoQ and 0.4% YoY. The segment continues to show strong momentum with new wins and ramp-ups across geographies.
- Healthcare: Grew 4.2% QoQ and 1.0% YoY. Growth was bolstered by open enrollment seasonality and the Payer AI solution platform.
- Energy, Mfg & Resources (EMR): Declined 4.9% QoQ and 5.8% YoY. Segment was hit by macro uncertainty and tariff issues, though the pipeline remains strong for cost-takeout deals.
Company-Specific & Strategic Commentary
- Wipro Intelligence & AI: Launched a unified AI approach anchored on industry platforms (Payer AI, AutoCortex) and delivery platforms (WINGS, WeGA). AI is now a board-level mandate for clients focusing on business model transformation.
- HARMAN DTS Acquisition: Completed in Q3, contributing 0.8% to CC revenue growth. The acquisition adds engineering and AI capabilities focused on the Tech, Comms, and Automotive sectors.
- Restructuring & One-offs: Recorded ₹263 crore restructuring charge for “obsolete skillsets” in Europe/Capco and ₹302 crore for gratuity expenses under the new labor code.
- Large Deal Ramp-ups: While the ‘Phoenix’ mega-deal is fully ramped, other recent wins are facing 6-quarter transition cycles and client-side delays, impacting Q4 revenue conversion.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| IT Services Revenue | 0% to 2.0% growth (Q4 FY26) | Includes incremental 2 months of HARMAN DTS; assumes fewer working days and delayed large deal ramp-ups. |
| Operating Margin | 17.0% to 17.5% band | FY26 targets account for HARMAN dilution, potential wage hikes, and large deal investment costs. |
| Dividend/Buyback | Ongoing capital return | Buyback remains an option with no legal impediments (NCLT/mergers) currently in place. |
Risks & Constraints
| Risk | Context |
|---|---|
| Macroeconomic & Tariff Uncertainty | Management cited tariff-related uncertainty and supply chain issues as primary reasons for declines in EMR and Consumer segments. |
| Ramp-up Delays | Several large deals are taking longer to convert to revenue due to complex vendor consolidation phases and client-side organizational changes. |
| Margin Dilution | Integration of HARMAN DTS and upcoming wage hike decisions pose short-term headwinds to the 17.6% margin level. |
Q&A Highlights
Large Deal Conversion (Aparna Iyer)
- Question: What is causing the delay in ramp-ups for next quarter? (Nitin Padmanabhan)
- Answer: Each deal is unique. While ‘Phoenix’ is fully realized, newer vendor consolidation deals take up to six quarters to scale. Client-specific environments are also slowing the transition timing.
Demand Environment (Srini Pallia)
- Question: Are clients giving both cost-out and transformation work to the same vendor? (Ravi Menon)
- Answer: The market is mixed. Some clients consolidate with existing partners, while others use savings from one vendor to fund AI transformation with another.
Capital Allocation (Kawaljeet Saluja)
- Question: With $6.5B cash, is a buyback back on the cards? (Kawaljeet Saluja)
- Answer: Statutory impediments like NCLT mergers are cleared. Buybacks remain a key tool for returning excess cash and will be discussed with the Board (Aparna Iyer).
Wage Hikes (Saurabh Govil)
- Question: When will the next wage hike cycle occur? (Nitin Padmanabhan)
- Answer: Wipro intended to review hikes this quarter; a final decision and confirmation will be made within the next few weeks.
Key Takeaway
Wipro Limited delivered a resilient Q3 FY26, characterized by a sequential revenue growth of 1.4% in constant currency and a seven-quarter high operating margin of 17.6%. Growth was supported by the HARMAN DTS acquisition (0.8% contribution) and strong performance in the BFSI and Healthcare sectors, though the EMR and Consumer segments remained pressured by tariff uncertainties and macro headwinds. Strategically, the company pivoted heavily toward “Wipro Intelligence,” an AI-first framework, while completing a necessary restructuring of obsolete skillsets. Management guided for 0-2% growth in Q4 FY26, a cautious range reflecting fewer working days and slower-than-expected ramp-ups of large consolidation deals. While the company maintains a robust $6.5 billion cash position and has significantly increased dividend payouts, the immediate focus remains on converting a strong $3.3 billion TCV pipeline into organic growth amidst a wait-and-watch client environment for FY27 budgeting.
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