Why Wipro’s Share Price is Falling: Complete Financial Breakdown & Sector Outlook

Wipro Limited, one of India’s leading IT service providers, has been under significant market pressure, with its stock experiencing sharp corrections in recent months. The reasons behind this aren’t one-dimensional - a mix of macroeconomic risks, weak financial guidance, and Wipro-specific operational issues have combined to dent investor confidence.

This detailed article breaks down the key factors behind Wipro’s share price decline, assesses the company’s challenges, and explores future opportunities for the Indian IT sector.

Table of Contents

1. Wipro’s Recent Share Price Performance and Market Sentiment
2. Key Macroeconomic and Sector-Wide Challenges Impacting Wipro Stock
3. Company-Specific Issues Dragging Wipro’s Stock
4. Wipro’s Operational Weaknesses Compared to Tier-1 Peers
5. Wipro’s Turnaround Strategies and Future Plans
6. Long-Term Outlook for Indian IT Sector Amid Current Volatility
7. Risks That Could Delay Wipro and IT Sector Recovery
8. Conclusion
9. FAQs

Wipro’s Recent Share Price Performance and Market Sentiment

Wipro’s share price has faced sustained pressure over the past few months, amplified by its weak quarterly numbers and broader market nervousness around IT stocks. The most immediate trigger came with the release of its Q4 FY25 earnings and weak guidance for the coming quarter.

Key highlights:

• On 17 April 2025, Wipro shares fell over 6% post Q4 FY25 earnings announcement.
• While net profit rose 6.4% sequentially, IT services revenue dropped 1.2% QoQ and 2.3% YoY.
• The company guided for a 1.5-3.5% sequential revenue decline for Q1 FY26.
• Nifty IT index also entered bear market territory in March 2025, adding to sector-wide pressure.

Wrap-up: The immediate selloff in Wipro’s stock was driven by weak guidance, disappointing earnings, and amplified by an overall IT sector sell-off due to global uncertainties.

Key Macroeconomic and Sector-Wide Challenges Impacting Wipro Stock

Several macroeconomic trends have weighed heavily on the Indian IT sector, intensifying the headwinds for Wipro. The US market which contributes nearly 60% of revenue for Indian IT majors remains clouded by recession fears, tariff risks, and weakened client sentiment.

Key factors:

• Global recession risk rose to 60% in April 2025 (as per JP Morgan estimates).
• Rising US tariffs under Donald Trump’s policies triggered uncertainty for Indian exporters.
• Muted discretionary IT spending led clients to postpone new tech projects.
• Broader Nifty IT index fell 22% from its 52-week high, mirroring systemic weakness.

Wrap-up: Macroeconomic volatility, especially US recession fears and tariff disputes, has cooled client budgets, directly affecting IT firms like Wipro.

Company-Specific Issues Dragging Wipro’s Stock

While the entire IT sector is facing difficulties, Wipro’s stock has underperformed its Tier-1 peers due to internal weaknesses and strategic missteps. These Wipro-specific challenges explain why its decline has been sharper compared to TCS, Infosys, and HCLTech.

Key weaknesses:

• Weak revenue conversion: Despite good deal wins, revenue realisation remains a challenge.
• High consulting exposure: Acquisitions like Capco make it vulnerable to discretionary spend cuts.
• Underperformance vs peers: Lowest USD revenue CAGR and EBIT growth among Tier-1 peers.
• Inefficient M&A returns: Wipro spent over $5.3 billion on 25 acquisitions since 2008, yielding the least incremental PAT.

Wrap-up: Beyond external challenges, Wipro’s operational inconsistencies and heavy consulting dependence have intensified its market underperformance.

Wipro’s Operational Weaknesses Compared to Tier-1 Peers

While external macroeconomic factors have hurt the entire IT sector, Wipro’s underperformance is largely a result of internal operational weaknesses. When compared to its Tier-1 peers like TCS, Infosys, and HCLTech, Wipro has consistently fallen short on key financial and strategic metrics. The table below highlights these gaps:

Wrap-up: This comparison clearly illustrates why Wipro’s stock has underperformed relative to its peers. Its weak deal conversion, high reliance on consulting, and poor returns from costly acquisitions have created a compounded drag on growth and profitability. Until these operational inefficiencies are resolved, Wipro’s market performance is likely to stay muted compared to sector leaders.

Wipro’s Turnaround Strategies and Future Plans

Despite present difficulties, Wipro is actively restructuring its business strategy to regain growth momentum. These steps focus on large deal wins, AI capability enhancement, cost management, and improving client relationships.

Key strategies:

• Strengthening large deal pipeline in BFSI and healthcare sectors.
• Leadership reshuffle in key markets like Europe.
• Investing heavily in AI and certifying over 50,000 employees in advanced AI skills.
• Achieving 12-quarter high operating margins through disciplined cost control.
• Targeting 70% or more of net income to be returned to shareholders over FY26-28 via dividends, buybacks, and payouts.

Wrap-up: Wipro’s internal realignment towards AI, deal wins, and operational efficiency could support a gradual recovery, provided macroeconomic conditions stabilise.

Long-Term Outlook for Indian IT Sector Amid Current Volatility

While the short-term environment remains cautious, the long-term fundamentals of Indian IT services remain strong. The sector is poised to benefit from global digitalisation, AI adoption, and India’s leadership in IT outsourcing.

Positive outlook drivers:

• Global IT spending forecast to surpass $8 trillion by 2030.
• Generative AI adoption fuelling next-gen digital transformation deals.
• Potential US Fed rate cuts could improve global tech budgets.
• Rising European demand for cloud and AI services.
• India commands 40% of the global outsourcing market.

Wrap-up: Despite present headwinds, the Indian IT sector’s robust long-term growth potential remains intact, offering opportunities once macro risks subside.

Risks That Could Delay Wipro and IT Sector Recovery

While optimism exists, recovery for Wipro and its peers may face obstacles from global economic, geopolitical, and operational risks.

Key risk factors:

• Prolonged US recession or delayed Fed rate cuts.
• Intensifying geopolitical conflicts.
• Sudden capital outflows from domestic markets.
• Deal ramp-ups slower than expected.
• Rupee appreciation hurting export-driven profits.

Wrap-up: Investors should remain cautious of these risks, as any escalation could trigger fresh volatility and delay the sector’s turnaround.

Conclusion

Wipro’s recent stock plunge was driven by weak Q4 FY25 guidance, macroeconomic worries, and poor revenue conversion, amplified by consulting-heavy exposure. Its relative underperformance compared to peers adds to investor concerns.

While the company is pursuing a strategic reset, the broader IT sector’s long-term fundamentals remain positive, powered by global tech spending and AI adoption. Investors should closely watch macro developments and Wipro’s execution of its turnaround strategy.

FAQs

Q1: What caused Wipro’s recent stock drop?

Weak Q4 FY25 earnings guidance, US recession fears, and a broader IT sector sell-off were the main culprits behind Wipro's recent stock decline.

Q2: How did brokerages react to Wipro’s results?

Brokerages responded with multiple downgrades and target price cuts following Wipro's disappointing guidance.

Q3: How would a US recession affect Wipro?

 A US recession would likely reduce client IT budgets, leading to project delays and negatively impacting Wipro's revenue.

Q4: What are Wipro’s internal challenges?

Wipro faces internal challenges including weak revenue conversion, heavy dependence on consulting, and underperformance compared to its peers.

Q5: What steps is Wipro taking for a turnaround?

Wipro is focusing on large deals, AI investments, leadership restructuring, and cost control to achieve a turnaround.

Q6: What’s the long-term IT sector outlook?

The long-term IT sector outlook is strong, fueled by digital transformation, AI growth, and continued outsourcing leadership.