Motilal Oswal has given Neutral recommendation for Wipro with a target price of Rs. 720 in its research report issued on Jan 13, 2022
Motilal Oswal’s research report on Wipro
Wipro (WPRO) reported 3QFY22 IT Services revenue of USD2.64b (+3.0% QoQ CC), missing our estimate by 70bps. The performance of verticals in 3Q was mixed, with strong QoQ growth in BFS and Consumer, while ENU and Tech were weak. The 3Q IT Services EBIT margin was down 20bps QoQ to 17.6%, in line with our estimate. Wipro has been able to sustain the EBIT margin ahead of its guided range of 17.0–17.5% despite the wage impact during the quarter. It reported TCV of USD600m in 3Q, moderately higher v/s the 2Q deal TCV. While we are not concerned about the miss in 3Q given the high base of 2Q as well as the seasonal impact, the 4Q revenue growth guidance of 2–4% QoQ also missed our estimate (coming in at 3.9% QoQ). Given the strong performance by Wipro over the last few quarters, along with positive demand commentary from the management, the guidance was underwhelming and would act as a drag on near-term share price performance. In our view, this should be partially compensated by the continued robustness in WPRO’s margins, which are ahead of its guidance of 17–17.5%.
We marginally lower our FY22–24E EPS by 1%. We maintain our Neutral stance as we await a) further evidence of the execution of WPRO’s refreshed strategy, and b) a successful turnaround from its growth struggles over the last decade before turning more constructive on the stock. Our TP implies 26x FY24E EPS.
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At 17:30 Wipro was quoting at Rs 649.85, down Rs 41.50, or 6.00 percent.
It has touched an intraday high of Rs 666.00 and an intraday low of Rs 648.00.
It was trading with volumes of 1,817,154 shares, compared to its thirty day average of 554,534 shares, an increase of 227.69 percent.
In the previous trading session, the share closed down 0.40 percent or Rs 2.75 at Rs 691.35.
The share touched its 52-week high Rs 739.80 and 52-week low Rs 398.00 on 14 October, 2021 and 25 March, 2021, respectively.
Currently, it is trading 12.16 percent below its 52-week high and 63.28 percent above its 52-week low.
Market capitalisation stands at Rs 356,203.09 crore.