KR Choksey has given Accumulate recommendation for Wipro with a target price of Rs. 471 in its research report issued on Oct 13, 2022
KR Choksey’s research report on Wipro
Wipro Ltd (WPRO) Q2FY23 performance was in line with our estimate. Dollar revenue stood at USD 2,798mn (KRChoksey est. USD 2,800Mn), up 4.1% in constant currency. Rupee revenue grew by 4.7% QoQ to INR 225,397Mn (KRChoksey est. INR 225,680Mn), including a 130bp gain from the Rizing acquisition. Volatility in Europe (partly on account of acquisitions) and APMEA has dragged down the operating margin to 14.0% QoQ. Company reported a net profit of INR 26,590Mn with margin of 11.8%. Management is already experiencing a slowdown in consulting business, partially offset by cross selling in services. We remain concerned given the vulnerability of consulting business due to its early cycle nature. The low employee addition in 2QFY23 leads to near term growth concerns. Wipro has several gaps in portfolio that requires both organic and inorganic investments to deliver at par with its Tier I peers. M&A as a key part of growth strategy, inorganic growth to play as a margindilutive tool in the near term.
Our target price of INR 471 is based on 18x Mar-24E EPS with EPS CAGR of ~10.2% over FY22-24E.