Prabhudas Lilladher has given Buy recommendation for Wipro with a target price of Rs. 728 in its research report issued on Nov 22, 2021
Prabhudas Lilladher’s research report on Wipro
Wipro is progressing well on their new strategic imperatives – 1) Bold (Capco, one of the biggest consulting acquisitions, is performing well with 22 joint deal wins and 45 deals in pipeline) 2) High performance driven culture (incentives for top performers increased by 2x) and 3) moving closer to clients (60% of leadership in local markets with increased proximity to clients, increased number of global account executives). New CEO’s sharp focus on growth has led to large deal TCV growth of 80% over past four quarters. Management mentioned that demand pipeline is the highest in recent past. Wipro aims to be an orchestrator i.e. deliver business outcomes integrating consulting, industry specific and cloud capabilities. Wipro is making strategic investments in cloud ($1Bn in Wipro Full-stride cloud services), cybersecurity, data and engineering led solutions. Cloud ecosystem has been major contributor for growth with cloud revenues growing at 6.4% CQGR on TTM basis and cloud related pipeline at 1/3rd of total pipeline. Wipro aims to sustain margins and invest in future technology capabilities and talent for growth. It is building talent at scale with improved fresher hiring engine (target to add 17.5K freshers in FY22 and 25-30K freshers in FY23) and improved performance based incentives. It is also utilizing Topcoder platform as talent cloud to de-risk from talent battle and help customers access talent at any time.
Our DCF based TP for Wipro is 728 (implied target multiple of 24.6x P/E on FY24 EPS). Wipro is currently trading at 25.3x/22x for FY23/24E earnings of INR25.7/29.7 respectively with Revenue/EPS CAGR of 12%/16.4% for FY22-24 respectively. Maintain BUY.