October 23, 2013 / 11:36 IST
Shares of Wipro fell 8 percent intraday on Wednesday after reporting a dollar revenue growth in-line with estimates and beating margin forecast.
Brokerages are mixed on the stock as Wipro has been a laggard in terms of revenue growth among the top four IT companies. Wipro's
consolidated net profit grew 28 percent year-on-year to Rs 1,932 crore and revenues jumped 19 percent on yearly basis to Rs 10,992 crore for the quarter ended September 2013. It crossed revenues Rs 10,000 crore for the first time in a quarter.
Revenues from its IT services increased 12.67 percent sequentially (20 percent year-on-year) to Rs 10,068 crore in the quarter ended September 2013.
Here are brokerages views on the stock:
Barclays - Maintain underweight rating
- Increase 12-month price target to Rs 465
- Sustained turnaround could be some time away
Citi - The good Q2 result/guidance shows improving revenue outlook and some room for margin expansion.
- Target price raised Rs 595, one of our top picks (along with HCLT) in the Indian IT Services space
- Raise earnings estimates by 4-7 percent
- Raise target multiple to 16x (from earlier 15x)
Nomura - Recent rally captures most of the upsides; maintain Neutral
- Prefer HCL Tech, Infosys and TCS to Wipro on possible greater participation in growth upsides
- See margin moderation ahead on non-recurrence of above gains.
- The company indicated its intentions of achieving parity with industry growth in FY15F.
Jefferies - Price target of Rs 530 (previously Rs 505) is based on 14x Mar'15E EPS
- On a constant currency basis, Wipro tends to be around the midpoint of its guidance and hence investors could look for 2.5-3 percent growth in Q3.
- This will imply sustained growth for two quarters, creditworthy especially given the fact that Q3 is seasonally a weaker quarter.
- Given that the stock is up 31 percent in the last three-months and has outperformed the Sensex by 28 percent, there is unlikely to be a runway rally.
- Wipro's growth is lowest among peers.
Credit Suisse- Revise up our earnings and target (to Rs 600 from Rs 540) on the back of these numbers
- Outperform rating is based on undemanding valuations and our view that revenue momentum is more likely to pick up than decelerate going forward.
- An important trigger from here will be revenue growth being among the best within the peer group.
Religare - Margins (Rupee-led) have driven EPS upgrades
- Further PE expansion requires greater growth convergence with the peer group
- Wipro trades at 17x FY14e and valuations look fair at current levels.
- We roll over to a December 2014 target price of Rs 550 (from Rs 530 earlier) and value Wipro at 15x 1-year forward.
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