Wipro stock rating upgraded to Buy at Investec on strong deal pipeline

Investing.com - Investec upgraded Wipro Ltd. (NYSE:WIT) from Hold to Buy and raised its price target to INR285.00 from INR272.00, citing the company’s strong order backlog and deal pipeline. The $28.9 billion IT services giant, currently trading at $2.67, appears undervalued according to InvestingPro analysis, which highlights the company’s GREAT financial health score of 3.36 out of 5.

Wipro reported a 0.3% quarter-over-quarter growth in constant currency terms for the second quarter of fiscal year 2026, which aligned with Investec’s estimates of a flat quarter. The IT services company, which generates annual revenue of $10.4 billion, provided guidance for the third quarter of fiscal year 2026, projecting growth between -0.5% and 1.5% quarter-over-quarter. InvestingPro data shows the company has maintained dividend payments for 25 consecutive years, currently offering a 3.8% yield.

The company’s large deal wins have increased 75% year-over-year on a last-twelve-months basis, while total deal wins are up 20% year-over-year for the same period. Investec expects the second half of the fiscal year to benefit from ramp-ups from the Phoenix deal and large vendor consolidation wins. According to InvestingPro, Wipro maintains a strong balance sheet with more cash than debt and liquid assets exceeding short-term obligations.

Wipro’s management stated its objective to maintain margins within a narrow band of 17-17.5% despite transition costs. Investec has factored in Wipro’s acquisition of Harman’s digital transformation solutions unit in the fourth quarter, which represents approximately 3% of revenue and is expected to have a 60 basis point impact on margins.

Following these developments, Investec has revised its earnings per share estimates upward by 0.6%, 1%, and 4.7% for the respective forecast periods, and rolled over valuations to the third quarter of fiscal year 2028 trailing twelve months.

In other recent news, Wipro Limited reported a 1.2% year-over-year increase in net income, reaching $365.6 million for the second quarter ended September 30, 2025. However, the company missed analyst expectations on earnings per share, posting $0.03 compared to the anticipated $0.04. Revenue for the quarter was $2.56 billion, aligning closely with the consensus estimate of $2.57 billion. This represents a 1.8% year-over-year growth and a 2.5% sequential increase. These developments reflect the company’s financial performance in the recent period.

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