India's Q1 2026 Earnings Season: Navigating Growth in Tech, Finance, and Renewables

As India's Q1 FY2026 earnings season unfolds, investors are scrutinizing results from strategic sectors to identify opportunities in a market increasingly driven by digitization and renewable energy transitions. Companies like Wipro (tech services), Axis Bank (financial services), and Sterling and Wilson Renewable Energy (renewables infrastructure) offer critical insights into sectoral dynamics, profitability resilience, and macroeconomic linkages. Below, we analyze their Q1 results and assess their potential as undervalued investments.

Wipro: Navigating Tech Sector Headwinds with Strategic Deals

Wipro's Q1 FY2026 results highlighted mixed performance, with revenue growth constrained by weak demand in Europe and project delays. However, its profit margins remained resilient due to cost discipline and currency tailwinds. Key metrics include:
- Revenue: Flat YoY at ₹22,000 crore (USD 254 million), with sequential declines due to a stronger rupee and lower utilization.
- Profit After Tax (PAT): Up 10% YoY to ₹3,351 crore, driven by efficiency programs and reduced operating expenses.
- Margins: EBIT margins held steady at 17.5%, supported by currency benefits.

Growth Drivers:
- AI and Digital Transformation: Wipro's focus on AI-powered solutions positions it to capture demand from enterprises accelerating digital adoption.
- Large Deal Pipeline: The $1.2 billion Phoenix contract and vendor consolidation wins could drive H2 growth.

Investment Takeaway:
Wipro's valuation (P/E of 15x) remains attractive relative to peers. While near-term revenue pressures persist, its margin resilience and strategic deals make it a long-term play for investors betting on India's tech services boom.

Axis Bank: Loan Growth Amid Margin Pressure

Axis Bank's Q1 results reflected a cautious start to FY2026, with mixed signals on profitability and asset quality:
- Loan Growth: Up 7.8% YoY to ₹10.6 trillion, driven by retail and corporate segments.
- Net Interest Margin (NIM): Compressed to 3.5% (down 30 bps YoY) due to falling loan yields.
- Provisions: Elevated slippages (₹6,000 crore) and stricter provisioning led to PAT growth of just 2% YoY to ₹6,250 crore.

Growth Drivers:
- Capex Cycle: India's infrastructure push (e.g., housing, highways) is boosting corporate and retail lending demand.
- Deposit Mobilization: A 12.5% YoY rise in deposits to ₹13.4 trillion strengthens funding stability.

Investment Takeaway:
Axis Bank's stock (P/B of 1.5x) trades at a discount to peers. While margin pressures are a near-term headwind, its strong deposit franchise and loan growth make it a buy for investors with a 1–2 year horizon. Focus on management's ability to stabilize NIMs amid RBI rate cuts will be critical.

Sterling and Wilson Renewable Energy: Riding India's Green Transition

Sterling and Wilson Renewable Energy delivered stellar Q1 results, fueled by robust order inflows and execution of landmark projects:
- Revenue: ₹2,506 crore (+36% QoQ), with strong contributions from solar and battery energy storage system (BESS) projects.
- Profit: PAT surged 273% QoQ to ₹55 crore, benefiting from cost controls and project completions.
- Order Book: ₹9,396 crore as of July 2024, including India's largest BESS project (1,000 MWh in Rajasthan).

Growth Drivers:
- Policy Tailwinds: India's National Electricity Plan targets 50 GW of solar and 82 GWh of energy storage by 2027–28.
- Global Demand: International orders (₹1,154 crore in Q1) highlight the firm's competitiveness in emerging markets like Southeast Asia.

Investment Takeaway:
Sterling's P/E of 91x reflects high growth expectations, but its order backlog and execution track record justify the premium. Investors should prioritize this stock for exposure to India's renewable energy boom, though short-term volatility is possible due to project delays or cost overruns.

Sectoral Trends and Macro Linkages

1. Tech Sector: Wipro's challenges mirror broader IT services industry pressures, including European demand slowdowns. However, AI-driven innovation and large deal wins position Indian IT firms to outperform in the medium term.
2. Banking Sector: Axis Bank's margin contraction underscores the sector's vulnerability to RBI rate cuts. Yet, rising loan demand and fiscal spending bode well for medium-term recovery.
3. Renewables: Sterling's performance exemplifies India's shift toward energy independence. The government's $500 billion infrastructure pipeline by 2026 will further boost demand for solar, wind, and storage projects.

Investment Strategy: Selective Long Positions

• Wipro: Buy on dips. Its margin resilience and large deal pipeline suggest a turnaround in H2.
• Axis Bank: Accumulate for long-term value. Focus on NIM stabilization and loan growth.
• Sterling and Wilson: Hold for capital appreciation. Monitor execution risks but prioritize exposure to India's green transition.

Final Note: India's Q1 earnings season underscores the resilience of sectors aligned with its digital and green agendas. Investors should prioritize companies with strong order books, margin discipline, and exposure to structural growth themes.

Data as of July 14, 2025. Past performance is not indicative of future results. Always conduct thorough due diligence before making investment decisions.