Reduce Wipro; target of Rs 420: PINC Research

55737 Investors following Wipro. Share this News with them.

0

Like this story, share it with millions of investors on M3

Reduce Wipro; target of Rs 420: PINC Research

PINC Research is bearish on Wipro and has recommended reduce rating on the stock with a target of Rs 420 in its January 20, 2012 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Hold HDFC Bank; target Rs 540: KRChoksey Hold TCS; target Rs 1206: R K Global Buy Bata India; target Rs 730: PINC Research ALSO READ See previous views by PINC Research See what other Experts & Brokerages are saying about Wipro See messages about Wipro Wipro BSE | NSE 01/06/12 Are Mutual Funds betting on Wipro?

PINC Research is bearish on Wipro and has recommended reduce rating on the stock with a target of Rs 420 in its January 20, 2012 research report.

"Wipro, IT services revenues grew 2.2%QoQ to USD1,505mn & in constant currency terms grew 4.5%QoQ. Growth was primarily driven by realisation improvement (onsite and offshore pricing increased 2.9%QoQ and 2.2%QoQ, respectively). On a consolidated basis, revenues increased by 9.7%QoQ to Rs98,808mn. OPM expanded 72bpsQoQ to 16.3%. Diluted EPS for Q3 was Rs5.93."

"BAS & ADM had robust growth with 3.2%QoQ & 3.9%QoQ respectively. Emerging service lines, Analytics and Product Engineering & Mobility, had 2.2%QoQ growth each. Wipro has been ramping up its capability and offerings in Cloud Computing, Analytics & Mobility domain. Finance Sols, Retail, Manufacturing & Healthcare grew 3%QoQ, 3.6%QoQ, 2.2%QoQ and 4.3%QoQ respectively. While US grew 3.8%QoQ, Europe & RoW were subdued with 0.1%QoQ & 1.2QoQ% growth respectively. Wipro's efforts on client mining has been paying off with USD100mn+ customers increasing from 1 in Q3FY11 to 6 in Q3FY12. Similarly, customers in USD75mn+ category increased from 10 in Q3FY11 to 14 in Q3FY12. Though these incremental S&M expenses would enable in stimulating growth, it would put pressure on the operating margins in the near future. Net addition of 5,004 employees taking the total headcount to 136,734. Net utilisation dipped 260bps to 73.5% in Q3FY12. Interestingly, utilisation excl trainees dipped 320bpsQoQ to 77.5% which indicates excess capacity of laterals in the system and future margin expansion would depend on the deployment of these resources."

"Q3 performance has been a mixed bag with good revenue performance but weak margin improvement. Q4 revenue guidance (1-3%QoQ growth) is healthy compared to flat growth guidance from Infosys. Wipro's restructuring seems to be bearing some fruits. As we have communicated in our earlier note, Wipro shall be able to bridge down the revenue growth difference compared to peers. However in a bid to achieve this, margin will be under pressure as S&M expenses are likely to increase. We maintain 'REDUCE' recommendation with a target price of Rs420 based on 16.5x FY13EPS," says PINC Research report. 

Bodies Corporate holding more than 50% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment