Morgan Stanley has downgraded Wipro to underweight from equal-weight, while cutting its target price to ₹242 per share, citing weaker revenue conversion and lower growth visibility relative to peers.
The brokerage noted that over the past year, Wipro benefited from improving deal wins and a strong margin performance, which helped narrow its price-to-earnings multiple discount compared with other large IT services companies. However, Morgan Stanley believes this re-rating may be difficult to sustain.
According to the brokerage, Wipro’s fourth-quarter guidance points to slower conversion of order wins into actual revenue, raising concerns about near-term execution. Morgan Stanley also flagged that growth visibility into FY27 appears weaker than peers, particularly at a time when the market is increasingly focused on consistency and revenue momentum across the IT sector.
While margin performance has remained resilient, Morgan Stanley cautioned that margins alone may not be sufficient to support valuations if top-line growth continues to lag. As a result, the brokerage expects Wipro’s PE discount to peers to widen again, reversing some of the gains seen over the past year.
Overall, Morgan Stanley believes the risk-reward for Wipro has turned unfavourable in the near term, prompting its downgrade despite acknowledging operational improvements already delivered.
Disclaimer: The views and recommendations above are those of Morgan Stanley. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
