Wipro's ₹15,000 Crore Buyback Elicits Investor Skepticism Amidst Third Consecutive Year of Revenue Decline

Wipro's Largest Share Buyback Fails to Cheer Investors Amidst Revenue Decline

Wipro Ltd, India's fourth-largest IT services company, saw its shares fall 2.78% to ₹204.35 at the close on the BSE on Friday, despite announcing its largest share repurchase worth ₹15,000 crore. The buyback, which involves the purchase of 600 million shares at ₹250 apiece, failed to lift investor sentiment due to underlying concerns about the company's business.

Wipro's annual revenue has been on a decline for the third consecutive year, shrinking by $756 million from its peak of $11.23 billion in FY23. The decline would have been worse without the $130 million in revenue from three acquired companies. In fact, the revenue lost by Wipro in the past three years exceeds the combined incremental revenue of LTM Ltd (formerly LTIMindtree), Mphasis Ltd, Coforge Ltd, and Persistent Systems Ltd in FY25.

The company's revenue declined by 0.32% from the preceding year, ending FY26 with $10.48 billion. Wipro had also experienced revenue declines of 2.7% and 3.8% in FY25 and FY24, respectively. Experts attribute this weakness to slow capability building and an inability to convert the deal pipeline into actual revenue, while an uncertain macroeconomic environment has prompted clients to pause tech spending.

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Despite the challenges, Wipro has been generous to its shareholders, returning over ₹32,900 crore ($3.55 billion) to them in the past three years. The company has spent $481 million to buy three companies, which accounted for $130 million in revenue. Wipro has also returned ₹14,517 crore through buybacks and ₹18,407 crore through dividends.

Analysts point out that Wipro's acquisition strategy has been focused on captive customers or strategic vendor consolidation deals, with the Harman Digital Transformation Services (DTS) being the only acquisition from a competency perspective. However, the company has been late in building AI-led capabilities compared to its peers, including Infosys, HCL Technologies, and LTM.

Wipro's management is confident of converting deal pipelines in the future, with Srini Pallia entering his third year as the company's chief executive officer on 7 April. However, external factors have compounded Wipro's troubles over the past three years, including higher pricing pressure in application and infrastructure maintenance services and a slowdown in discretionary spending in the consulting practice.

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The company expects to start FY27 on a weak note, with revenue projected at $2.6 billion to $2.65 billion. The delay in the ramp-up of large deals and slow revenue realization from top clients could weigh in on the company.