Wipro Shares Plunge 4% After Mixed Q2 Results: Should Investors Sell or Hold

The stock of IT major Wipro experienced a sharp decline of over 4% in early trade, hitting an intraday low, following the release of its fiscal second-quarter (Q2 FY26) results. The reaction highlights investor apprehension over the company’s mixed performance, which saw profit marginally miss street expectations, alongside cautious near-term revenue guidance. The crucial question for investors now is whether this dip represents a short-term volatility or a structural concern that warrants an exit.

The Mixed Q2 Performance: Key Figures and Concerns

Wipro’s Q2 FY26 results presented a duality. While certain operational metrics offered encouragement, the headline financial figures were viewed as underwhelming compared to analyst consensus:

• Profit Miss: Consolidated net profit for the quarter rose marginally by 1.2% year-on-year (YoY) to ₹3,246 crore, falling slightly short of some market estimates. Sequentially, the profit actually saw a decline of 2.5% from the previous quarter.
• Muted Revenue Growth: Revenue from operations grew 1.8% YoY to ₹22,697 crore. In constant currency (CC) terms, the key IT Services segment revenue saw only a modest 0.3% quarter-on-quarter (QoQ) growth, although this was at the upper end of the company’s own guidance.
• Cautious Guidance: The guidance for the December quarter (Q3 FY26) for IT Services revenue was set at a sequential growth range of -0.5% to +1.5% in constant currency. This relatively muted outlook is a primary factor dampening investor sentiment, signaling continued near-term pressure.
• Margin Impact: The IT Services operating margin for the quarter was 16.7%. Crucially, this included a one-time provision of approximately $13.1 million related to a customer bankruptcy. Adjusted for this one-off event, the margin was a healthier 17.2%, which actually represents a modest YoY expansion.

The Silver Lining: Strong Deal Wins and Operational Stability

Despite the subdued headline numbers, the Q2 results were underscored by a robust performance in securing new business, which provides a strong indication of future revenue visibility:

• Mega Deal Momentum: Total deal bookings for the quarter stood at a strong $4.7 billion, marking a 30.9% YoY increase in constant currency terms. Large deal bookings were particularly impressive at $2.85 billion, surging over 90% YoY. This sustained momentum in deal wins, which includes key multi-year contracts, is seen as the foundation for medium-term revenue acceleration.
• Improving Growth Trajectory: Management commentary highlighted that the revenue momentum is “strengthening,” with three out of its four Strategic Market Units (SMUs) growing sequentially. The company also noted a return to growth in the Europe and APMEA regions.
• Easing Attrition: The voluntary attrition rate (on a trailing 12-month basis) continued its downward trend, easing to 14.9%. Lower attrition is a key operational positive for the IT sector as it reduces replacement costs and safeguards project execution capabilities.
• Focus on AI: Wipro’s management emphasized its clear strategy to “lead with AI,” indicating a strong push into new-age technology areas that are expected to drive the next wave of industry growth.

Brokerage Views: A Divided House on ‘Sell or Hold’

The contrasting elements in Wipro’s results have led to a highly divided stance among leading brokerage firms, making the sell-or-hold decision even more complex for retail investors:

The Investor Verdict: Sell for Immediate Gains, Hold for Long-Term Value

The decision to sell or hold Wipro shares hinges on an investor’s time horizon and risk tolerance:

The Case for ‘Hold’ (Long-Term Investor):

The strong surge in large deal bookings is the most compelling reason to hold. These deals convert into revenue over multiple quarters, providing a strong medium-to-long-term growth trajectory. The easing attrition and the management’s focus on operational efficiencies and high-growth areas like AI suggest a structural turnaround effort is underway. The stock’s current correction makes the valuation more attractive for patient investors banking on the eventual execution and ramp-up of the substantial deal pipeline.

The Case for ‘Sell’ (Short-Term/Risk-Averse Investor):

The primary concern is the tepid Q3 guidance and the sequential dip in profit. This indicates that a significant revenue acceleration remains elusive in the immediate future, and the company may continue to underperform its top-tier peers for at least the next few quarters. Investors seeking immediate stock appreciation or those who are risk-averse regarding execution challenges during a leadership transition might consider booking profits or cutting losses.

Wipro’s Q2 results are a tale of two halves: weak near-term financial metrics but strong future-facing deal wins. The 4% drop appears to be a reaction to the profit miss and cautious Q3 guidance, largely overlooking the positive deal momentum. For investors with a long-term perspective (18-24 months), this dip could be a chance to hold or accumulate the stock, betting on the successful execution of the massive deal pipeline and the broader growth recovery anticipated in the second half of the fiscal year and beyond. Short-term traders, however, may face continued volatility until the guidance shows a definitive upward trend.