Emkay Global Financial has given Hold recommendation for Wipro with a target price of Rs. 680 in its research report issued on Nov 20, 2021

Emkay Global Financial’s report on Wipro

At its analyst meet, Wipro reiterated its strategy focused on five strategic priorities to accelerate revenue growth further. A simplified operating model and a focus on prioritized markets have led to superior growth performance in the last few quarters. Wipro’s bet on the cloud ecosystem has yielded desired results, with revenue growing at a CQGR of 6.4% over the last 4 quarters. It now accounts for 30%+ of revenues and 1/3rd of the total deal pipeline. Wipro plans to invest USD1bn over 3 years to accelerate growth. Wipro expects margins to sustain at current levels on the back of benefits accruing from pyramid rationalization, higher offshoring and revenue acceleration-led operating leverage invested back into domain and solution capabilities, M&A, and the front-end sales team.

Outlook

The company has delivered a strong operating performance in the last few quarters on the back of demand tailwinds, a simplified operating model and a focused market approach. However, the valuation remains rich, not leaving any margin of error. We retain Hold with a Sep’22 TP of Rs 680 at 25x Sep’23E EPS.

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