Wipro Q3 FY26 Results: Revenue Growth Holds Steady as Profitability Feels the Heat
Wipro Q3 FY26 results tell a varied story of resilience under pressure. The IT services leader clocked consistent improvement in revenue growth and robust cash generation during the Wipro Q3 FY26, even while grappling with a noticeable erosion of profitability, largely due to labour code-related costs and margin pressure. While the global demand outlook remains cautious, Wipro’s deal pipeline, execution discipline, and interim dividend announcement during Wipro Q3 FY26 signal management confidence in long-term stability. The quarter highlights a broader reality facing India’s IT sector: growth is intact, but evolving cost structures and regulatory changes are reshaping profitability dynamics.
Wipro Q3 FY26: Despite a Slight Jump in Revenue, Net Profit Drops
Wipro on Friday reported a consolidated net profit of ₹3,119 crore for the quarter ended December 31, 2025, down 4% sequentially and 7% on year. The decline in profitability came even as execution remained consistent, and it was largely on account of cost pressures, including those related to provisions towards adjustments under India’s new labour codes.
The company said on an adjusted basis for labour code impacts, net profit came in at ₹3,360 crore, which was an increase of 3.6% quarter-on-quarter and marginal growth of 0.3% year-on-year. This revision does show how the regulatory changes are generating a temporary distortion to reported earnings for IT companies across the board, Wipro included.
IT Services Revenue Rises, but Just Short of Street Estimates
Wipro’s IT services revenue for Q3 FY26 stood at ₹23,378 crore, marginally lower than consensus estimates. Revenue was up 3.3% sequentially, suggesting a consistent delivery in spite of clients’ still tentative open wallet on discretionary technology spend.
In cc (constant currency) terms, IT services revenue increased 1.4% QoQ (quarter-on-quarter), but fell 1.2% YoY (year-on-year), with the global demand recovery remaining uneven, it added. Although revenue growth is sluggish, it suggests a relative stability compared with previous quarters during which demand slowdowns were more pronounced.
Wipro Q3 FY26 Sees Rising Costs Put Pressure on Operating Margins
Operating performance for the quarter was mixed. IT services EBIT came in at ₹3,573.5 crore, below Street expectations. Reported EBIT margin was 15.3 percent, compared to 16.7 percent in the prior quarter, with increased employee and compliance costs offsetting profitability.
But according to IFRS reporting, Wipro’s posted IT services operating margin came at 17.6%, which includes a sequential accretion of 90 BPS and minuscule YoY expansion. Management attributed this to execution discipline, cost optimisation measures, and operating leverage, indicating that DDR’s fundamental business is relatively well placed—an observation often made when headline margin pressures are high.
Costs of the Code: A Structural, Not Cyclical Issue
One of the themes of Wipro’s Q3 FY26 performance was the effect of labour code–linked adjustments, which brought one-time as well as recurring costs. Analysts are expecting these regulatory changes to raise employee-related costs for the IT industry overall, causing firms to reconsider workforce composition, remuneration models, and long-term cost strategies.
For Wipro, these expenses were partly responsible for the decline in profit and margins. Though analysts feel that margin volatility on labour codes should taper once the transition settles and operational efficiencies gradually find their way back.
Wipro Q3 FY26 Deal Pipeline Remains Healthy Amid Demand Caution
Deal momentum was strong for Wipro during the quarter despite pressure on profitability. Total deal bookings were $3.3 billion, and large deal bookings were $0.9 billion, reinforcing continued client demand in strategic areas of our markets.
Strong operating cash flow at ₹4,259 crore (135.4% of net income) indicated healthy cash generation and a strong balance sheet. This cash flow performance enhances our flexibility for dividends, investments, and strategic actions.
Wipro Q3 FY26 Guidance Signals Cautious Optimism for Coming Quarters
For the March quarter, Wipro provided expectations for information technology services revenue of $2.64 billion to $2.69 billion, or flat-to-2% growth on a sequential basis in constant currency. While the guidance is very much taking its cues from this cautious demand environment, it actually implies stability rather than contraction, which will be a major reassurance to investors.
Brokerages also remain subdued on the IT major’s FY26 overall revenue growth, given that large deal ramp-ups and acquisitions will be partially offset by pricing pressure and cost inflation.
Interim Dividend Underscores Shareholder Focus
Wipro’s board announced an interim dividend of ₹6 a share, taking the company’s total shareholder payout for the year to about $1.3 billion. The dividend declaration represents endorsement by the management of cash flows and long-term visibility on earnings despite pressures on margins in the short term.
For shareholders, regular dividends are an important signal of financial discipline and dedication to shareholder return during a period of earnings volatility.
How Wipro Stacks Up Against IT Peers
Wipro’s Q3 FY26 results are a reflection of the trends in India’s IT sector. A number of its peers also reported margin pressurization and profit erosion in the quarter, due to regulatory expenses, wage inflation, and hesitant client spending. While sales growth is spotty, deal pipelines across the industry suggest demand has stabilised rather than weakened.
It is an environment that values operational effectiveness, cost discipline, and the capability to turn large deal wins into profitable revenues.
Key Takeaways for Investors
Wipro’s Q3 FY26 performance indicates: a business in transition. Revenue momentum and order backlog point towards operational stability, while labour code costs and margin pressures suggest near-term challenges. Healthy cash flows, disciplined execution, and a robust deal pipeline offer some cushion to the company as it adjusts to structural transitions.
For investors, the next few quarters will be about margin recovery and cost rationalisation, as well as how quickly those large deals flow into sustainable growth.
Conclusion: Stability Amid Structural Shifts
Wipro Q3 FY26 highlights the changing contours of IT services. Despite profitability being impacted by regulation and cost headwinds, the company had proved to be resilient with consistent revenue growth, solid deal bookings, and strong cash flow generation. Even as the impact from strength in labour code moderates and demand environment gradually improves, Wipro’s ability to balance growth with efficiency will be a crucial indicator of its medium-term trajectory.
Also Read: https://investikfuture.com/indian-stock-market-today-q3-market-volatility/
