Shares of Wipro rose 2.03 per cent on Monday’s trade to close at ₹461.95 on the NSE despite posting weaker-than-expected March quarter financial results. Even analysts remain rather bearish on the stock. The company’s profits rose 5.2 per cent q-o-q. However, the company recorded an 8 per cent profit decline in Q4 at ₹2,835 crore.
Also read:Wipro: Becomes a ‘show me’ story, again! Many brokerages have retained their “Neutral to Sell” stance on the stock observing the company’s sluggish growth.
Global brokerages such as Nomura and HSBC have given ‘reduce’ rating for the stock, while UBS and Goldman Sachs have maintained their ‘sell’ rating. However, Goldman Sachs has revised (up or down)* the target price to ₹430.
JP Morgan which has a ‘neutral’ rating for the stock at a target price of ₹480 noted that the margin performance was solid with 40bps expansion in 4Q led by operational efficiencies.
Domestic brokerage Motilal Oswal which also reiterated ‘neutral’ rating for the stock at TP of ₹490 observed that despite decline in revenue, the company has managed to improve its IT services EBIT margin by 40bp to 16.4 per cent, in line with consensus expectations, driven by better cost control and a reduced employee count. “We find the momentum at Capco encouraging, which signals early signs of improvement in the macro environment. While the near-term outlook for consulting remains robust, the leakage in existing books and weaker demand for IT Services would continue to impact near-term growth adversely,” Motilal Oswal said.
Prabhudas Lilladher has a ‘hold’ rating for the stock and said, “We are baking in revenue growth flat and 5 per cent y-o-y CC with margin improvement of 40bps and 50bps for FY25e and FY26e, respectively. We estimate revenues/earnings CAGR of 2.0 per cent/5.1 per cent over FY24-FY26e. The stock is currently trading at 19x FY26e, we are assigning P/E of 19x to FY26e with a target price of ₹440.”
Analysts of ICICI Securities have upgraded the rating from sell to ‘reduce’ as the stock reduced over 7 per cent over the last month. Being sceptical on Capco growth, the analysts stated, “We value Wipro at 16x (unchanged), on FY26E EPS of ₹26 (FY25-26E EPS kept largely unchanged) to arrive at our TP of ₹410 (vs ₹397 earlier).”
Also read:At Wipro, Srini has a mountain to climbMeanwhile, retaining its ‘buy’ rating on Wipro stock, brokerage JM Financial said in its report, “We cut FY25/26E USD revenue growth estimates by 5/3 ppt to 0.4 per cent/7.1 per cent driving 4-5 per cent cuts to our FY25-26E EPS. Best in-class FCF/PAT ratio (159 per cent in FY24), reasonable valuations (17x FY26E EPS) and improving prospects keep us constructive. We continue to value the stock at 20x 24-M fwd EPS for an unchanged TP of ₹550.”
