Mumbai: Wipro shares dropped more than 8% Monday, reacting to the disappointing outlook given by the country’s fourth-biggest outsourcing company that announced its earnings Friday.

Analysts said disappointment over fourth-quarter growth guidance by the management has led to the fall. They remain divided about the stock’s prospects.

Shares of Wipro ended at ₹245.5 on NSE Monday, down 8.2%.

Wipro ADRs were, however, up 2.18% on Monday 22.33 IST.

Wipro’s revenue from operations was at ₹23,556 crore for the quarter ended December 31, with sequential and on-year increases of 3.8% and 5.5%, respectively.

“While performance was broadly in line with expectations, with stable growth and margins, the fourth quarter revenue guidance of 0-2% growth, including the impact of the Harman acquisition, came in below market expectations, likely contributing to the sharp correction in the stock price,” said Sushovon Nayak, research analyst, Anand Rathi Institutional Equities. Nayak said although the third quarter is typically seasonally weak, the softer Q4 outlook was unexpected by the Street.

“Delays in large deal ramp-ups and a 5% quarterly decline in the manufacturing vertical have further weighed on sentiment,” he said.The brokerage has downgraded Wipro from ‘Buy’ to ‘Hold’ and reduced its target price to Rs 300 against Rs 311 earlier, implying 22% upside from Friday’s close. Elara Capital reiterated a ‘Sell’ rating on the stock with a higher target price of Rs 220, due to Wipro’s lack of growth compared to peers , and downward pressure on margin.

Elara’s note said the margin gap is likely to widen compared to large caps. JM Financial has maintained its ‘Buy’ rating. “We cut EPS by 3-4.5% but maintain our target price; potential for a large capital return (buyback), undemanding valuations (19x FY27E), and expectations of an overall demand recovery keep us constructive,” said the brokerage’s note.